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Consolidated Investment Products (Tables)
6 Months Ended
Mar. 31, 2019
Consolidated Investment Products [Abstract]  
Schedule of balances of CIPs
The balances related to CIPs included in the Company’s consolidated balance sheets were as follows:
(in millions)
 
March 31,
2019
 
September 30,
2018
Assets
 
 
 
 
Cash and cash equivalents
 
$
265.4

 
$
299.8

Receivables
 
93.5

 
114.2

Investments, at fair value
 
2,139.6

 
2,109.4

Other assets
 

 
1.0

Total Assets
 
$
2,498.5

 
$
2,524.4

 
 
 
 
 
Liabilities
 
 
 
 
Accounts payable and accrued expenses
 
$
44.9

 
$
68.0

Debt
 
32.8

 
32.6

Other liabilities
 

 
9.3

Total liabilities
 
77.7

 
109.9

Redeemable Noncontrolling Interests
 
819.3

 
1,043.6

Stockholders Equity
 
 
 
 
Franklin Resources, Inc.’s interests
 
1,161.2

 
1,092.6

Nonredeemable noncontrolling interests
 
440.3

 
278.3

Total stockholders’ equity
 
1,601.5

 
1,370.9

Total Liabilities, Redeemable Noncontrolling Interests and Stockholders Equity
 
$
2,498.5

 
$
2,524.4

Schedule of investments of CIPs
Investments of CIPs consisted of the following:
(in millions)
 
March 31,
2019
 
September 30,
2018
Investment securities traded in active markets
 
$
1,521.5

 
$
1,651.8

Other equity securities
 
418.9

 
311.0

Other debt securities
 
131.7

 
114.3

Loans
 
38.4

 
32.3

Real estate
 
29.1

 

Total
 
$
2,139.6

 
$
2,109.4

Schedule of assets and liabilities measured at fair value on a recurring basis
Assets and liabilities of CIPs measured at fair value on a recurring basis were as follows: 
(in millions)
 
Level 1
 
Level 2
 
Level 3
 
NAV as a
Practical
Expedient
 
Total
as of March 31, 2019
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
Investments
 
 
 
 
 
 
 
 
 
 
Equity securities
 
$
161.0

 
$
271.0

 
$
257.6

 
$
162.4

 
$
852.0

Debt securities
 
0.6

 
1,087.8

 
131.7

 

 
1,220.1

Loans
 

 

 
38.4

 

 
38.4

Real estate
 

 

 
29.1

 

 
29.1

Total Assets Measured at Fair Value
 
$
161.6

 
$
1,358.8

 
$
456.8

 
$
162.4

 
$
2,139.6

(in millions)
 
Level 1
 
Level 2
 
Level 3
 
NAV as a
Practical
Expedient
 
Total
as of September 30, 2018
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
Investments
 
 
 
 
 
 
 
 
 
 
Equity securities
 
$
270.7

 
$
154.8

 
$
199.7

 
$
113.8

 
$
739.0

Debt securities
 
0.6

 
1,219.5

 
118.0

 

 
1,338.1

Loans
 

 

 
32.3

 

 
32.3

Total Assets Measured at Fair Value
 
$
271.3

 
$
1,374.3

 
$
350.0

 
$
113.8

 
$
2,109.4

 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
Other liabilities
 
$
0.6

 
$
8.7

 
$

 
$

 
$
9.3

Schedule of changes in Level 3 assets of CIPs
Changes in Level 3 assets were as follows: 
(in millions)
 
Equity
Securities
 
Debt
Securities
 
Loans
 
Real Estate
 
Total 
Level 3
Assets
for the three months ended March 31, 2019
Balance at January 1, 2019
 
$
193.6

 
$
100.9

 
$
39.2

 
$

 
$
333.7

Acquisition
 
45.2

 
39.7

 

 

 
84.9

Realized and unrealized gains (losses) included in investment and other income, net
 
(4.5
)
 
(3.8
)
 
(0.5
)
 
3.4

 
(5.4
)
Purchases
 
25.7

 
9.4

 

 
25.6

 
60.7

Sales
 
(0.3
)
 
(14.2
)
 
(0.3
)
 

 
(14.8
)
Foreign exchange revaluation
 
(2.1
)
 
(0.3
)
 

 
0.1

 
(2.3
)
Balance at March 31, 2019
 
$
257.6

 
$
131.7

 
$
38.4

 
$
29.1

 
$
456.8

Change in unrealized gains (losses) included in net income (loss) relating to assets held at the end of period
 
$
(4.8
)
 
$
(3.2
)
 
$
(0.2
)
 
$
3.4

 
$
(4.8
)
(in millions)
 
Equity
Securities
 
Debt
Securities
 
Loans
 
Real Estate
 
Total 
Level 3
Assets
for the six months ended March 31, 2019
Balance at October 1, 2018
 
$
199.7

 
$
118.0

 
$
32.3

 
$

 
$
350.0

Acquisition
 
45.2

 
39.7

 

 

 
84.9

Realized and unrealized gains (losses) included in investment and other income, net
 
6.9

 
(11.0
)
 
(1.5
)
 
3.4

 
(2.2
)
Purchases
 
35.4

 
9.4

 
8.2

 
25.6

 
78.6

Sales
 
(0.4
)
 
(20.1
)
 
(0.6
)
 

 
(21.1
)
Settlements
 
(1.0
)
 
(0.1
)
 

 

 
(1.1
)
Transfers into Level 3
 
0.1

 

 

 

 
0.1

Transfers out of Level 3
 
(25.4
)
 
(3.6
)
 

 

 
(29.0
)
Foreign exchange revaluation
 
(2.9
)
 
(0.6
)
 

 
0.1

 
(3.4
)
Balance at March 31, 2019
 
$
257.6

 
$
131.7

 
$
38.4

 
$
29.1

 
$
456.8

Change in unrealized gains (losses) included in net income (loss) relating to assets held at the end of period
 
$
7.0

 
$
(3.9
)
 
$
(0.9
)
 
$
3.4

 
$
5.6

 
 
Three Months Ended
March 31, 2018
 
Six Months Ended
March 31, 2018
 
 
Equity
Securities
 
Debt
Securities
 
Total 
Level 3
Assets
 
Equity
Securities
 
Debt
Securities
 
Total 
Level 3
Assets
(in millions)
 
Balance at beginning of period
 
$
159.6

 
$
136.2

 
$
295.8

 
$
160.7

 
$
135.4

 
$
296.1

Realized and unrealized gains included in investment and other income, net
 
15.6

 
2.0

 
17.6

 
17.5

 
2.1

 
19.6

Purchases
 
11.5

 
10.5

 
22.0

 
22.6

 
10.5

 
33.1

Sales
 

 
(37.7
)
 
(37.7
)
 
(14.9
)
 
(37.7
)
 
(52.6
)
Foreign exchange revaluation
 
1.7

 
1.2

 
2.9

 
2.5

 
1.9

 
4.4

Balance at End of Period
 
$
188.4

 
$
112.2

 
$
300.6

 
$
188.4

 
$
112.2

 
$
300.6

Change in unrealized gains included in net income (loss) relating to assets held at the end of period
 
$
15.4

 
$

 
$
15.4

 
$
16.3

 
$
0.1

 
$
16.4

Schedule of valuation techniques and significant unobservable inputs used in Level 3 fair value measurements
Valuation techniques and significant unobservable inputs used in Level 3 fair value measurements were as follows:
(in millions)
 
 
 
 
 
 
 
 
as of March 31, 2019
 
Fair Value
 
Valuation Technique
 
Significant Unobservable Inputs
 
Range (Weighted Average 1)
Equity securities
 
$
156.8

 
Market comparable companies
 
EBITDA multiple
 
4.7–13.6 (9.0)
80.7

 
Discounted cash flow
 
Discount rate
 
6.0%–18.2% (13.0%)
20.1

 
Market pricing
 
Private sale pricing
 
$0.25–$3.38 ($1.62) per share
 
 
 
 
 
 
 
 
 
Debt securities
 
111.9

 
Discounted cash flow
 
Discount rate
 
6.0%–23.0% (12.9%)
19.8

 
Comparable trading multiple
 
Price-to-earnings ratio
 
10.0
Enterprise value/
EBITDA multiple
 
12.3
 
 
 
 
 
 
 
 
 
Loans
 
38.4

 
Discounted cash flow
 
Loss-adjusted discount rate
 
3.0%–25.3% (13.2%)
 
 
 
 
 
 
 
 
 
Real estate
 
29.1

 
Yield capitalization
 
Equivalent yield
 
5.0%
__________________ 
1 
Based on the relative fair value of the instruments.

(in millions)
 
 
 
 
 
 
 
 
as of September 30, 2018
 
Fair Value
 
Valuation Technique
 
Significant Unobservable Inputs
 
Range (Weighted Average)
Equity securities
 
$
171.9

 
Market comparable companies
 
EBITDA multiple
 
5.0–13.6 (9.3)
27.8

Discounted cash flow
Discount rate
8.0%–16.5% (14.1%)
 
 
 
 
 
 
 
 
 
Debt securities
 
78.7

 
Discounted cash flow
 
Discount rate
 
7.0%–14.8% (10.8%)
33.9

Comparable trading multiple
Price-to-earnings ratio
10.0
Enterprise value/
EBITDA multiple
20.9
5.4

Market pricing
Private sale pricing
$42 per $100 of par
 
 
 
 
 
 
 
 
 
Loans
 
32.3

 
Discounted cash flow
 
Loss-adjusted discount rate
 
3.0%–22.7% (12.0%)
Schedule of financial instruments of CIPs not measured at fair value
Financial instruments of CIPs that were not measured at fair value were as follows:
(in millions)
 
Fair Value
Level
 
March 31, 2019
 
September 30, 2018
 
 
Carrying
Value
 
Estimated
Fair Value
 
Carrying
Value
 
Estimated
Fair Value
Financial Asset
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
1
 
$
265.4

 
$
265.4

 
$
299.8

 
$
299.8

Financial Liability
 
 
 
 
 
 
 
 
 
 
Debt
 
3
 
$
32.8

 
$
32.6

 
$
32.6

 
$
32.4

Schedule of changes in redeemable noncontrolling interests of CIPs
Changes in redeemable noncontrolling interests of CIPs were as follows:
(in millions)
 
 
 
 
for the six months ended March 31,
 
2019
 
2018
Balance at beginning of period
 
$
1,043.6

 
$
1,941.9

Net income
 
6.1

 
26.7

Net (distributions) subscriptions and other
 
(6.2
)
 
115.8

Net deconsolidations
 
(224.2
)
 

Balance at End of Period
 
$
819.3

 
$
2,084.4