THE £8 billion property fund management arm of Insight, the fund manager owned by HBOS, is to be spun off this month in an estimated £260 million flotation on the Alternative Investment Market.
The listing will create one of the biggest independent property fund managers in the UK. The business, which will be renamed Invista Real Estate Investment Management, is to be chaired by Alastair Ross Goobey, one of the UK’s best-known fund managers and a respected commentator on the property market.
HBOS will retain a majority stake — expected to be between 55 and 60 per cent — and Invista hopes to raise more than £100 million of new capital from institutional investors.
Invista said the float would enable it to grow more quickly than if it had to rely solely on the HBOS balance sheet to provide seed capital for new funds. The float comes amid voracious investor demand for commercial property, with prices sky-high in many sub-sectors of the market.
Duncan Owen, chief executive of Invista, believes that the property fund management industry is on the verge of explosive growth in the run-up to the introduction of tax-efficient real estate investment trusts (Reits) to the UK next January. Reits are expected to encourage a broader spectrum of investors — from the man in the street to overseas investment funds and hedge funds — to invest more cash in property.
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Invista aims to benefit from these rising capital flows through the creation of new property funds and the acquisition of existing funds.
Mr Owen said: “First and foremost we want to be very profitable, but there is nothing to stop us eventually becoming a FTSE 100 company.”
Insight’s property fund management business has made a name for itself over the past three years, snapping up some of Britain’s best-known buildings. In March it paid British Land £527 million for Plantation Place at the Broadgate office complex in the City of London. At the time, many market-watchers raised eyebrows at the price, but the building has since been securitised and valued at £600 million.
The property fund manager has increased assets under management by 80 per cent since October 2003 to about £8 billion. In the same period, revenues have grown from about £10 million to an estimated £38 million this year.
JPMorgan Cazenove is sole adviser to the flotation.