Aviva Investors is set to take on around £2bn of real estate assets currently managed by AXA Investment Managers as a result of its £5.6bn takeover of Friends Life.
AXA IM manages the Friends Life Group Managed Property Pension Fund as well as various Friends Life with-profits funds, which have significant real estate assets under management.
They will be transferred to Aviva Investors as part of a wider process which has already seen Aviva take on nearly £21bn of fixed-income assets that were previously managed by Friends Life in-house.
The bulk of the remainder of Friends Life’s £75bn assets is managed by AXA IM and Schroders.
The timing of the transfer has not yet been agreed, however, talks are ongoing about the transfer of roughly half of the assets by the end of the year, according to a source.
Aviva has so far focused on the transfer of asset classes in which it has the strongest in-house expertise.
Aviva Investors has total AUM of £246bn, of which around £25bn is real estate.
AXA IM fund manager Rob Awford currently manages the Friends Life Group Managed Property Pension Fund, which had total net assets of £449.4m at the end of March 2015.
It directly owns 94 properties, has stakes in two and has one listed investment, with roughly 43% of its assets in retail, 26% in sheds and 11% in offices.
The Friends Life FLAS With-Profits Fund had total AUM of £4.1bn at the end of last year, of which 8.2% – or £336.2m – was in real estate. The Friends Life FLC With-Profits Fund had total AUM of £6.6bn, of which £910.8m was in real estate.
The funds’ real estate assets are managed by AXA IM senior fund manager James Owen.
Schroders has a £12.2bn mandate from Friends Life which includes equity, multi-asset and fixed-income products.
Aviva’s acquisition of Friends Life, which completed in April, created the UK’s largest insurance and savings business, with more than 16m customers.
An AXA IM spokesman said: “We do not comment on market speculation.”
jack.sidders@estatesgazette.com
