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Banks, Financial

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Categorized | Financial, Insurance, Property

Axa property arm expands in Asia

Posted on September 21, 2016

Axa Headquarters And Branch...The Axa SA logo is seen on the gates of the company's headquarters in Paris, France, on Monday, Dec. 14, 2009. AMP Ltd., Australia's second-largest asset manager, and French insurer Axa SA raised their bid for Axa Asia Pacific Holdings Ltd. to A$12.9 billion ($11.8 billion) and gave the wealth manager a week to accept. Photographer: Antoine Antoniol/Bloomberg©Bloomberg

The property investment arm of French insurer Axa has acquired an Australian real estate fund manager in order to expand its Asian business.

Axa Investment Managers, one of the world’s 10 largest real estate fund managers, said on Wednesday that it had bought Sydney-based Eureka Funds Management, which oversees US$3.7bn of properties.

    The deal, the first acquisition of another company by the real estate fund manager, will help Axa to increase its investments in Asian property.

    Pierre Vaquier, chief executive of the real assets division of Axa IM, said the purchase marked a shift from organic growth to buying companies as the group broadens its real estate and infrastructure footprint. Axa did not reveal the acquisition price.

    The move to make a foothold in Australia, which is a mature property market, comes ahead of moves into “more emerging and more opportunistic markets such as China”, he added.

    The group will seek joint ventures on the Chinese mainland after scrapping an earlier attempt to establish an investment business in the country about three years ago, Mr Vaquier said.

    Axa IM manages €66bn ($74bn) of property and infrastructure assets but only 5 per cent is outside Europe. Australia is its second Asian market after Japan, where the group established a team from scratch.

    Eureka also operates debt funds and manages “alternative” real estate assets such as car parks and hotels. Mr Vaquier said the new office would serve Axa’s in-house funds and third-party investment clients.

    Axa IM has previously worked with Eureka on deals including the acquisition of the Australia Post headquarters in Sydney on behalf of Singaporean private investors for Aus $168m ($127m).

    Axa is not the only European insurer building up its exposure to Asian property: the property arm of rival Allianz said in June it would seek to add up to €3bn of Asian real estate in three years.

    Axa’s purchase of Eureka also comes as insurers seek greater exposure to income-producing physical assets to compensate for low bond yields.

    “With the low interest rate environment, real assets [property and infrastructure] are in high demand among pension funds and insurance companies. All of them are increasing their exposure to property,” Mr Vaquier said.

    “There is a reallocation going on between real assets and securities.”

    More than 60 per cent of European insurers plan to increase their allocations to real estate or other “alternative” assets, according to research last year by Standard Life Investments, as they face a shortfall in returns from their existing assets compared with their commitments to policyholders.