FINLAND - Evli Investment Management is to roll out a private equity real estate fund in the Baltics by the end of March - the firm's first real estate offering.
The Helsinki-based firm, which has e2.66bn assets under management, said it was looking at some new asset classes in 2005 where historically it hasn’t had a direct presence.
Managing director Maunu Lehtimaki (pictured), said: “We’re not looking to expand in the very immediate future geographically but we are more in the process of deepening the breadth of our offering. We are in the process now of setting up a private equity real estate fund investing into Baltic real estate. We will start offering this product to our institutional and private banking clients in the next month or so, most likely in early March for closing in late March.”
The move comes on the back of strong demand from Finnish investors for indirect real estate vehicles and a positive market outlook in the Baltics.
“There is demand for this type of investment and the market outlook and net yields are still, by Finnish or Nordic standards, very interesting in the Baltics, so there is definitely clear yield pick up to be had by investing into that market,” Lehtimaki said.
Timo Penttila, head of research at Evli, added: “It is the demand, it’s the market outlook but it’s also the presence that we have, we are very strong in the Baltic countries… we already have our foot on the ground there and it’s easy to start business there.”
Lehtimaki said the Baltics offered the opportunity for better returns than the Finnish real estate market.
“Investors are looking at ways to indirectly invest into real estate markets and the reason why we are making a product that invests into the Baltic real estate market is purely for return reasons,” he said.
“The net yield levels for office space here in the centre of Helsinki are somewhere between 6 and 7% whereas in the Baltics, they would be considerably higher. Finland is part of the Euro, hence for the European property investor; you don’t have the currency risks. When you look at the Baltics, they are now today part of the European Union, they are NATO members, and so a lot of the political and economic risks have clearly subsided over the last two years. They aren’t members of the Euro yet but they soon will be.” Evli is also investigating possibilities of setting up other investment vehicles for the Russian capital market. “We feel that as the outlook in the more established markets in Europe is not that great, nor in terms of equity markets, nor bond markets, that these neighbouring countries do offer some very special opportunities,” Lehtimaki said.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.