The PERE Podcast Inside a landmark £4.7bn UK property fund merger
Aug 22, 2025
Join Charlotte D'Souza, an expert at PERE, and Joe Marsh from PEI Group, as they dive into the monumental £4.7 billion merger between Legal & General and Federated Hermes. They discuss the significant differences between defined contribution and defined benefit pension schemes and how they impact investment strategies. The conversation sheds light on the evolving landscape of UK pensions, the unique motivations for this rare merger, and the future ambitions for international expansion in the property fund market.
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Scale Solves Structural Mismatch
- The merger paired two long-established UK open-ended property funds to create a £4.7bn platform with greater scale and liquidity.
- Legal & General's larger MPF absorbed Federated Hermes to address investor-base mismatches and market pressures.
Investor Base Drove The Deal
- The two funds held similar assets and returns but differed sharply by investor type, which drove the deal.
- Federated Hermes's fund was hamstrung because its structure largely excluded DC investors, limiting inflows.
Seek DC Capital Or Restructure
- DB schemes have moved toward matching liabilities with liquid bonds, reducing their allocations to open-ended property funds.
- Managers must therefore seek DC capital or redesign fund structures to replace exiting DB money.