M&G Real Estate has bought a 65% stake in BauMont Real Estate Capital, the European real estate fund manager specialising in value-add investment strategies in Western Europe.
Established in 2017 by former CarVal Investors directors in the UK, BauMont’s 18-strong team is led from Paris and London with €1.5 billion of assets under management and a team with an investment track record of more than 20 years in European value-add real estate.
Schemes include the Edenica development at 100 Fetter Lane and the Old Change House offices in the City of London as sell as London residential properties bought with operating partner Addington Capital.
M&G said the acquisition is part of a strategy to selectively add investment capabilities in areas where active management has the potential to "deliver alpha to clients over medium to long-term investment horizons".
BauMont will join forces with M&G’s £40 billion global real estate business, enabling M&G to expand beyond its core commercial, residential and debt strategies. M&G said it also strengthens its ability to invest throughout the full property cycle, unlocking potential returns through active management. In turn, BauMont will benefit from M&G’s pan-European real estate platform, alongside its global distribution capabilities that have been grown in recent times to target institutional investors in Europe and Asia.
Separately, M&G’s With-Profits Fund – which invests and manages the long-term savings on behalf of 4.6 million UK policyholders – is investing €200 million in BauMont’s latest fund and is seeking to secure higher returning opportunities in European value-add property in the UK and France for its wider £13 billion real estate allocation.
It say investor intention surveys have shown that European and Asian investors see the market potential of value-add real estate strategies, especially at this point in the cycle.
Tony Brown, global head of M&G Real Estate, said in a statement: “This new partnership is an opportunity to broaden the real estate strategies we offer at a time when the asset class is back in focus for global institutional clients who are considering increasing their allocations at this stage in the cycle.
“Throughout our extensive history of real estate investing, we have continued to strive for excellence and can now provide clients with a compelling proposition throughout the real estate cycle – and across the capital stack. We look forward to a long and successful partnership with BauMont.”
Robert Balick, managing partner at BauMont, added: “European real estate markets are adjusting to the higher rate environment and are entering a new cycle of growth where demand is focused on a limited supply of high-quality assets. Value-add strategies can take advantage of re-set entry pricing, whilst actively repositioning assets to meet the needs of modern occupiers.
M&G Real Estate is the 11th largest real estate manager globally headquartered outside of the US, with nine offices in Europe and four in Asia-Pacific.
M&G Real Estate was advised by CBRE Investment Banking.