Despite having just divested a £6 billion in property assets, Aviva Investors is targeting a significant expansion of its new real assets platform over the next several years.
Last week, the London-based asset management business of UK insurer Aviva announced it had sold both its real estate multi-manager platform, with approximately £6 billion ($8.05 billion; €6.84 billion) – or 2 percent – of its total assets under management, as well as its interest in the Encore+ open-ended pan-European fund series to LaSalle Investment Management.
“The disposal of the multi-manager business is a means for us to really focus the business on operating assets,” said David Skinner, managing director of real estate strategy and fund management at Aviva. “We really believe that’s the way in which you can best control the performance you can deliver to your clients.”
Similarly, the firm’s sale of its interest in the Encore+ fund series, which Aviva had co-managed with LaSalle for 10 years, also pointed to the firm “wanting greater control of investment management chain,” he said.
With an exclusive focus on direct investing, Aviva has now formed a new real assets platform through the combination of its £17 billion direct real estate business and its £20 billion alternative income solutions business, which includes infrastructure, structured finance and private debt.
The new platform will be led by a senior management team that will include Skinner, who will oversee the firm’s real estate investment strategy and funds management across Europe; Daniel McHugh, who as managing director of real estate investments will be focused on transaction activity and asset management; Barry Fowler, managing director of alternative income; and Chris Urwin, formerly global head of research in real estate and head of research in real assets. Mark Versey will lead the group – which will encompass 300 professionals across London, Norwich, Paris, Frankfurt and Toronto – as chief investment officer.
“We know our clients are looking increasingly at real assets more holistically than they had done previously and they expect allocations to real assets to continue to rise,” Skinner said. “They may be seeking to exploit the liquidity premium and they may be seeking to meet other needs, like meeting liabilities, beating inflation or needing income.”
With allocations to alternative strategies expected to more than double by 2025, Aviva is aiming to ramp up its new real assets platform at a rapid clip. “We would expect around £3 billion in assets under management growth from new and existing funds raised from external investors over the next couple of years,” he said. “We’re very much in growth mode. Beyond 2020, we’d expect £4 billion-£5 billion AUM in annual growth across the real assets platform.” At least some of that growth would come from the launch of new products in real estate, as well as a new multi-strategy real assets fund, he said.
“The key message is we are investing heavily in the business over next few years, both in terms of people and infrastructure, in order to provide the products our clients are increasingly demanding,” Skinner said.