The strategic partnership between Franklin Templeton and three real assets managers to deliver specialist infrastructure solutions to individual investors will broaden DigitalBridge’s distribution beyond its traditional channels, Chief Commercial and Strategy Officer Kevin Smithen told this publication.

The venture, announced on 16 September, will see three infrastructure managers provide access to deal flow across their respective sectors of expertise; DigitalBridge sourcing digital infrastructure opportunities, Copenhagen Infrastructure Partners (CIP) energy transition, and Actis, the Sustainable Infrastructure business of General Atlantic, emerging markets. The initiative targets a spectrum of private wealth clients, from traditional retail and retirement accounts to high-net-worth individuals and family offices.

“DigitalBridge is constantly looking at ways to expand the distribution of our digital infrastructure and digital real estate solutions to different groups of investor bases,” said Smithen in an interview. “We’re also very focused on growing our TAM to both real estate investors through new solutions we’re introducing in the market as well as through retail and private wealth channels.”

The partnership was formed through bilateral discussions between the parties and evolved quickly over the past six months, according to Smithen. “Franklin Templeton decided to focus their strategy on specialist infrastructure solutions providers rather than larger diversified generalist alternative asset managers and DigitalBridge tried to be identified as best of breed within the digital infrastructure, digital real estate, AI space,” he said.

Diverse capabilities across sectors and geographies

Under the structure of the partnership, Franklin Templeton will manage marketing and distribution, while DigitalBridge, CIP, and Actis will source and underwrite deals.

DigitalBridge’s remit will be to provide opportunities in the digital infrastructure sector. “DigitalBridge has a great flow of opportunities,” Smithen said. “We have many deals that go above and beyond the capacity of our current investor base with surplus and overflow across fiber, towers, data centers and digital infrastructure real estate and power for data centers as well. There are some potential relationships and solutions for AI data centers.”

The firm sees significant opportunities in build-to-suit tower deployments, fiber-to-the-home (FTTH), and the roll out of dark fiber for data centers and edge computing. “There are a lot of build-to-suit opportunities in the cell towers space, especially building out additional spectrum that’s been auctioned off around the world, and there are huge FTTH and consumer broadband opportunities as well as providing dark fiber for data centers, private cloud, edge, AI, and powered shells, which have lots of growth capital needs.”

Just this year, DigitalBridge expanded its global data center offering through the acquisition of Yondr in July. The company owns more operational facilities in Europe but with DigitalBridge’s backing the firm is already ramping up its US development activity and in August announced the acquisition of a 163-acre site south of Dallas, Texas where it will develop a 550 MW data center campus.

The company’s platform companies are increasingly hungry for capital as the tech industry pursues the white whale of AI. It was reported earlier this month that portfolio company Vantage Data Centers is working with JPMorgan and MUFG to source up to USD 38bn in debt financing for two of their projects.

In it for the long haul

Smithen emphasized the long-term appeal of infrastructure for retail investors. “As capital needs grow, and some platforms have 15-to-40-year underlying contracts and price escalators, this provides attractive compound opportunities for retail investors long-term.”

The JV partners will maintain separate underwriting responsibilities, with Franklin Templeton allocating capital based on the pipeline of actionable deals presented by the asset managers. “There are target allocation guidelines within the partnership but that has to match up with a pipeline of actionable deals. The three partners will provide capacity in attractive deals and the Franklin Templeton team will allocate the capital to those deals on a pre-agreed criterion,” Smithen noted.

While there are competitive overlaps between the partners, Smithen said the structure allows for alignment without compromising proprietary information. “There are elements of their businesses that compete against DigitalBridge and in that sense they won’t have to share information but the underwriting responsibility will go to Franklin Templeton. They’re all aligned in the success of the partnership.”

“This partnership is a win-win, and the benefits are split as there will be incremental revenue and profitability for our partners without the large salesforce that would normally require,” Smithen said. “Longer term, the wealth distribution channel has the potential to be quite significant for DigitalBridge. For alts managers it’s a high percentage of their inflows.”