Invista to be broken up

The company which describes itself as the largest listed real estate fund management group in the UK is unwinding its business after losing a major contract managing several funds

London-based Invista Real Estate Investment Management is set to be broken up or sold after losing the management of a key family of funds, it said today.

Its majority owner, Lloyds Banking Group also based in London, has decided to hand the management of investment agreements with clients, Clerical Medical, Halifax Life and HBOS, to subsidiary Scottish Widows, which it has owned since 1999.

In a statement, Invista said in light of that decision, it would be best to perform an “orderly realisation of value” from Invista’s assets including its asset management business. The proceeds will be returned to shareholders, it added.

Lloyd’s decision to shift the management to Scottish Widows dealt a hammer blow to Invista because the funds in question contributed £5.3 million (€6 million; $8.3 million) of revenue to the company out of a total of £13.7 million.

All but one of the agreements to manage assets on behalf of clients had an initial period of five years to run from 2006 when Invista demerged from HBOS and went public on London’s junior Alternative Investment Market (AIM).

Discussions during the summer about Lloyds possibly extending Invista’s contract ended in a decision to terminate the management contracts upon 12 months’ notice. Termination takes effect in October 2011.

In a statement, Invista said: “During the course of discussions in relation to the HBOS contracts, the board of Invista has been reviewing its strategic options in the event that notices of termination of the HBOS contracts were served. The Board’s conclusions following this initial review are that without the revenue generated from the HBOS contracts, the interests of both clients and shareholders of Invista would be best served through an orderly realisation of value from Invista’s assets, including its asset management business, with the proceeds of such realisations returned to Invista shareholders in due course.”

Invista manages around £5.4 billion of assets as of 30 June.

It manages a numbers of mostly UK and European funds, though it also invests in Asia via the Invista Real Estate International Fund.