Investment drive halted as credit crunch continues to hit
Hermes has put a freeze on £1bn of fundraising plans because of a lack of demand from investors.
The fund manager has shelved plans to raise money for two of its main UK ventures, and pulled the sale of several stakes it holds in other property funds.
The fund manager was aiming to raise £500m by selling a stake in MEPC, the business park owner it bought in 2000, but has halted the investment drive because of a lack of demand. Credit Suisse and King Sturge were advising.
The equity was earmarked to fund a five-year development programme that would have allowed MEPC to double its £1.3bn portfolio.
Hermes has also put a stop to fundraising for its £530m UK Logistics Fund, co-owned with Legal & General. The fund, which is the largest industrial fund in the UK, had a target size of £1bn. DTZ and King Sturge were appointed to begin the drive to reach £1bn last summer, looking for an initial £150m.
Hermes has also pulled the sale of holdings in 10 UK property funds, including a stake in the fund that owns Britain’s biggest shopping centre, Bluewater.
It was planning to sell the stakes, which it holds on behalf of the British Telecom Pension Scheme, for around £240m.
The sales represented around 17% of Hermes’ total holding in unit trusts such as WELPUT, Ashtenne Industrial Fund, Hercules Unit Trust, IPIF and X-Leisure.
DTZ Corporate Finance was marketing the stakes, which Hermes wanted to sell to fund a £700m investment drive in continental Europe. However, the stakes are no longer on the market.
Tim Turnbull, commercial director at Hermes, said: ‘We decided in the light of where demand was, and the relative pricing, to keep the stakes.
‘With the UK Logistics Fund, it is along the same lines: there is not great demand for indirect vehicles.’
He added: ‘We are always assessing our portfolio in light of the current market but we remain committed to development.’