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ASI could set an M&A trend in deal with investment trust specialist

ASI could set an M&A trend in deal with investment trust specialist

By Jessica Tasman-Jones, Portfolio Adviser,16 Dec 20

‘An open-ended equivalent wouldn’t have been anywhere near as attractive’

A raft of liquidity mismatch problems faced by open-ended funds and the increasing popularity of real assets and alternatives could prompt more asset managers to follow in Aberdeen Standard Investments’ footsteps with its stake in investment trust specialist Tritax.

ASI said it wanted to “evolve” its property offering when it this month announced its acquisition of 60% of logistics specialist Tritax, best known to UK investors for its £3.7bn Tritax Big Box Reit and £549.6m Tritax Eurobox investment trust.

“This transaction reiterates our commitment to evolve our real estate offering to ensure it develops with changing industry dynamics and client needs,” said ASI global head of real estate and deputy head of private markets Neil Slater at the time.

In March, two funds from the asset manager’s £37bn real estate investment arm were among the products caught up in coronavirus-related suspensions this year triggered by material uncertainty clauses relating to independent valuations. The Standard Life Investments UK Real Estate and Aberdeen UK Property funds reopened on 16 November, but approximately £5bn worth of assets held in open-ended direct UK property funds remain suspended.

“It wouldn’t surprise me if more asset managers were looking at specialist property companies,” says QuotedData property analyst Richard Williams.

“Like Tritax, these companies have proven track records in driving returns from property and that is attractive to asset managers especially when compared to open-ended property funds. It does seem open-ended property funds have had their day, with huge liquidity mismatches being exposed in recent years.”

ASI is one of the few large asset managers that already has a foothold in the property investment trust space, including the £248.6m Aberdeen Standard European Logistics Income investment trust, which could be a merger candidate with Tritax Eurobox.

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