Nuveen-Schroders, 230 billion colossus on networks and real estate

Nuveen's acquisition of Schroders Plc (a USD 13.5 billion deal) with the aim of creating one of the world's largest active asset managers with almost USD 2.5 trillion in assets also has important effects on the real estate, real assets (land, power plants, forests, mines, etc.) and infrastructure segments. Segments that are increasingly interconnected in both asset allocation and strategy.

Nuveen, in fact, manages - according to the latest available data - $139 billion in real estate, over $13 billion in real assets and $30 billion in infrastructure, for a total of over $182 billion (EUR 145 billion). Schroders, with the acquisition, brings in a total of about $50 billion (between $33 billion AUM in real estate and about $15 billion in infrastructure). Altogether, the transaction is expected to result in the management of (at least) $230 billion in real estate assets, land, facilities and the broad infrastructure galaxy.

Nuveen is an investment manager of the Teachers Insurance and Annuity Association of America, acquired by the latter in 2014 in a $6.25 billion deal. With a history dating back to 1898, when it began underwriting municipal bonds, Nuveen now manages $1.4 trillion in public and private assets, according to its website. Schroders is its largest acquisition to date.

Nuveen, headquartered in New York (and whose European real estate business is largely based on TIAA's acquisition of Henderson Global Investors' real estate investment division more than 10 years ago, known as TH Real Estate) is much larger in US real estate, with more than USD 100 billion of its real estate assets under management in the Americas, USD 26 billion in Europe and 7 billion in the Asia-Pacific region.
Schroders, meanwhile, is more concentrated in Europe, where almost 90 per cent of its real estate assets under management in Europe are allocated.

Several prominent City officials have argued that the sale of Schroders to Nuveen was a necessary defensive merger. But they also see it as a reflection of the low valuations of UK listed companies and London's reduced attractiveness for foreign capital in Europe. The sale of one of the City's best-known institutions to a group owned by a US pension fund highlights the challenges that asset managers face in the UK and continental Europe in coping with the wide reach of US competitors and the increased pressure on costs and fees, which necessitate consolidation.