The Electricity Supply Pension Scheme (ESPS) has merged its UK property portfolio with the CBRE UK Property Fund to create a £1.47bn (€1.75bn) fund.

The merger was the result of a review of the pension fund’s £849m UK property portfolio, which has been managed by CBRE Global Investors since 2006.

It could make the CBRE UK Property Fund, which had a net asset value of £621m, one of the 10-largest funds in in the AREF/IPD All Balanced Funds Index.

The trustees of ESPS have been considering a number of options put forward by investment consultancy Aon Hewitt, and it was decided to merge the UK portfolio with an existing core balanced fund.

Following a process by Aon Hewitt, the CBRE UK Property Fund, set up in 1997 and overseen by fund manager Hannah Marshall, was selected.

The new enlarged fund has been structured as property authorised investment fund (PAIF) and Marshall will continue as fund manager.

Marshall said the ESPS portfolio “was complementary to the existing fund and had a good performance track record”.

She added: “Our investors will now be able to benefit from the PAIF structure which is more flexible and efficient.

We are also able to offer overall lower fee charges and a larger diversified investor base.

With the increased size of the fund, we now have the ability to further exploit economies of scale.”

Michael Ness, head of UK for CBRE Global Investors said the merger is indicative of a growing trend where investors have “an increasing desire for scale and simplicity”.