AEW Europe, the Paris-based real estate investment manager, has attempted to strengthen its retail investor funds business through a proposed merger with a platform owned by the French national postal service.
The corporate owners of AEW Europe and French retail fund platform Ciloger are negotiating a merger which would see Ciloger join AEW Europe’s existing retail investor product unit. The transaction is expected to close by the summer.
AEW's global and Asian units are both 100 percent owned by French financial services firm Natixis. However, Natixis owns only a 60 percent stake in AEW Europe, while the remaining 40 percent is currently owned by the UK government’s development finance institute, the CDC Group. French bank La Banque Postale, which is a subsidiary of the French national postal service, owns a 90 percent stake in Ciloger, while CNP Assurances holds the remaining interest.
CDC was AEW Europe's former majority owner and retained an interest in the business after selling a large portion of its previous stake to Natixis, since the London-based group wanted to maintain a stake in AEW Europe as the latter firm continued to manage some of its assets.
However, Natixis Global Asset Management, the asset management arm of Natixis, will acquire CDC’s 40 percent stake in AEW Europe prior to the completion of the transaction. After completion of the proposed deal, Natixis is expected to transfer a 40 percent stake in AEW Europe to La Banque Postale.
La Banque Postale will retain its stake in the combined business because Ciloger's main product is selling to French retail real estate investors through the post office distribution network.
“It was important for the French post office that they still have a link with the business that is providing them with those real estate funds. That's why it is a contribution as opposed to us just buying the business for cash,” Rob Wilkinson, chief executive of AEW Europe, told PERE.
“The strategic rationale to this was that together we are benefitting from the retail distribution network of the French post office, but also our banking network,” he added. “Above Natixis sits BPCE, one of the largest retail banking groups in France.”
“The French retail market has been restructured and we are anticipating that the flows we are able to generate from both networks will be higher than the individual amounts we were collecting previously,” said Wilkinson, who will run the combined business.
“The French retail fund market has quite recently begun to invest more actively outside France, which is a new trend,” he added. “So investments elsewhere in Europe by these types of funds is a further reason for the attractiveness of Ciloger joining AEW Europe. They will get access to our sourcing and management capabilities across Europe.”
By merging the two investment management businesses, the new entity would become one of the largest real estate investment managers in Europe, with combined assets under management of over €23 billion. The addition of Ciloger will also take AEW Europe's headcount to 330.
AEW Europe’s assets under management totaled €18.1 billion as of December 31. AEW Europe manages a wide spectrum of real estate investment strategies from core to opportunistic and manages a range of sector-specific funds, separate accounts and club deal strategies.
Ciloger is the portfolio management company of the real estate investment trusts and other French real estate investment schemes marketed by La Banque Postale group and savings bank Caisses d’Epargne. As of last March, the value of the real estate assets managed by Ciloger was €4.5 billion.
Wilkinson said that given the anticipated merger close, the new medium-term assets target for AEW Europe is likely to be €30 billion, compared with the €23 billion target from its previous three-year plan, which would have ended at the end of next year.