Standard Life, Aberdeen merger could create £40bn property arm

Standard Life’s merger with Aberdeen Asset Management will create a new £40bn (€46.3bn) real estate investment manager.

Combined, the two companies will represent the UK’s biggest asset management firm and the country’s largest in terms of global real assets under management (AUM).

Latest figures, for the end of 2016, show Standard Life Investments managed £22.2bn in real estate (including listed property and debt) and Aberdeen managed £17.9bn.

The merger is expected to take the global real estate AUM beyond that of M&G – the UK’s largest – which stood at €34.5bn in the middle of last year, according to IPE Real Estate’s most recent Top 100 investment managers’ survey.

Standard Life and Aberdeen’s equivalent numbers stood at €22.3bn and €24.5bn, respectively.

The merger has been interpreted as a response to trends in the wider investment world, but, as part of the move, Standard Life and Aberdeen will need to manage the coming together of two similarly-sized real estate businesses.

A source close to the merger said the two real estate arms would be complementary, since Standard Life had a bigger real estate presence in the UK and Aberdeen was larger in continental Europe.

European activities make up the majority of both companies’ real estate activities. According to IPE Real Estate’s Top 100 survey, Standard Life and Aberdeen managed €21.8bn and €23.8bn in Europe, respectively.

In contrast, Standard Life managed €282m in the Americas and €235m in Asia-Pacific, while Aberdeen managed €131m in the Americas and €536m in Asia-Pacific.

Both companies have been growing their real estate businesses in Asia-Pacific. Standard Life recently hired Choon Wah Wong from Partners Group to head its new Singapore office.

Aberdeen, meanwhile, raised capital from investors including Finland’s Keva for its latest Asia-Pacific multi-manager fund.

The tie-up with Standard Life comes less than four years after Aberdeen merged with Scottish Widows Investment Partnership. That merger saw Aberdeen’s real estate AUM rise from £16bn to £23.5bn.

The merger was quickly followed by the departure of Aberdeen’s then global head of property Andrew Smith.

Aberdeen’s real estate business is currently led by Pertti Vanhanen, while David Paine oversee’s real estate at Standard Life.

Branding for the merged entity has yet to be revealed.