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London hedge fund giant looking to build low-income homes

London

AN acute shortage of subsidised housing for low-income families in the UK is drawing some unexpected investors.

Man Group, the world's largest publicly traded hedge fund manager, is poised to start a fund to finance construction of affordable homes, according to a person with knowledge of the matter.

Man has hired former Cheyne Capital Management partner Shamez Alibhai to run the pool, the person said, asking not to be identified because the information is private.

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Man Group and Mr Alibhai declined to comment through representatives for the firm.

The hedge fund will join investors such as buyout firm Blackstone Group as well as mutual funds in seeking to tap opportunities within the social housing sector as money managers pursue higher yields in the prevailing low-interest rate environment.

The stock of affordable housing in the UK remains under pressure following a cut in government grants to support new construction and soaring values that are putting home ownership beyond the reach of many families.

More than 1.1 million households were on local authorities' waiting lists in England for housing as at Apr 1 last year, according to government data.

Blackstone, the world's largest private equity investor in real estate, made its foray into the sector by acquiring a 90 per cent stake in social housing provider Sage Housing in 2017.

The firm's strategy is to buy and then rent out lower-cost apartments that developers are required to build alongside private homes.

Mr Alibhai, a former Credit Suisse Group executive, joined investment manager Cheyne in 2006 and set up its Social Property Impact Fund in 2014.

Under his leadership, the pool of money was used to acquire and build properties for the elderly and people with low incomes or disabilities in the UK, and then lease the buildings to social-service providers.

Following Mr Alibhai's departure in December 2018, Cheyne moved the pool to sit within the real estate group led by Ravi Stickney.

Man Group, which managed about US$114 billion at the end of September, is no stranger to real estate investing. In 2016, it purchased Aalto Invest Holding, whose portfolio includes direct investments in US single-family homes as well as commercial and residential properties in Europe. BLOOMBERG