RE core giant emerges after £660bn mega-merger

Standard Life and Aberdeen Asset Management have merged to create Europe’s second-biggest fund manager

Real estate is set to have a new investment powerhouse enter the fray following Standard Life’s takeover of Aberdeen Asset Management, the London-based asset management firm, Real Estate Capital’s sister title PERE reported.

The deal would create Europe’s second largest fund manager with £660 billion ($810 billion; €762 billion) in assets under management and one of the region’s largest core property investors.

The investment division of UK insurer, Standard Life Investments, has around £16 billion of assets in direct real estate, public listed real estate and real estate debt, including its £2.5 billion core, open-ended UK Real Estate Fund. It operates with a team of 158 real estate investment professionals, based in five locations: Edinburgh, London, Paris, Boston and Hong Kong.

The firm’s real estate debt business operates through three lending mandates, providing senior, whole loan and mezzanine debt with fixed and floating rate terms for between three and 12 years. The firm closed its first real estate debt fund on £155 million at the end of 2015. It has two segregated mandates; £250 million from its parent insurer’s balance sheet and £135 million from its annuity business, which are understood to be close to being fully invested.

Aberdeen manages more than £18 billion in property, as at 31 December 2016, and operates out of 39 offices in 26 countries, including its £2.6 billion core open-ended Aberdeen UK Property Fund.

The merger values each Aberdeen share at 286.5 pence and Aberdeen’s existing issued ordinary share capital at approximately £3.8 billion. Following completion, Aberdeen shareholders would own approximately 33.3 percent and Standard Life shareholders would own approximately 66.7 percent of the combined group on a diluted basis.

Standard Life said on Monday the combined group would operate under branding drawn from both the Standard Life Group and the Aberdeen Group and be headquartered in Scotland. Its two chief executives – Martin Gilbert from Aberdeen and Keith Skeoch from Standard Life – would be co-bosses of the new group.

“We have always been clear that it is Standard Life’s ambition to become a world-class investment company and that this would be achieved through continued investment in diversification and growth, coupled with a sharp focus on financial discipline,” commented, Keith Skeoch, CEO of Standard Life.

“We are therefore delighted that this announcement marks another important step towards achieving that ambition.”

Standard Life’s most recent property fund activity saw the firm hold a second close on its third Europe-focused real estate investment vehicle after garnering €237 million in capital commitments in September.

Aberdeen, meanwhile, held an initial first close on its fourth Asia-Pacific multi-manager vehicle after raising $151 million back in January. Last April the firm launched its fifth German residential fund, Aberdeen German Urbanisation Property Fund, which it hopes to raise €1.5 billion.