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M&G may reopen frozen UK property fund soon – CEO

Mar 9, 2021

By Carolyn Cohn

LONDON (Reuters) – British insurer and asset manager M&G may reopen its suspended UK property fund soon, its chief executive said on Tuesday, as the company’s shares jumped on better-than-expected 2020 operating profit.

M&G suspended the 2.1 billion pound UK fund in December 2019, citing uncertainty about Brexit and weakness in the retail property sector.

“We have been working hard to make sure we sell properties in that portfolio so we are able to meet redemptions when it reopens,” CEO John Foley told Reuters, adding that properties had been sold at “good prices”.

“I’m hoping that we are in a position to do something shortly.”

M&G said last month that cash levels in the fund had reached more than 21%. Higher cash levels enable funds more easily to meet redemption requests.

The UK property fund sector largely froze in March 2020 as a result of valuation uncertainty due to the pandemic. But many funds have already reopened.

M&G, which was spun out of Prudential in 2019, had net outflows of 6.6 billion pounds last year. A weak investment performance in its retail funds outweighed strong performance in institutional asset management.

But operating profit and assets under management came in above expectations.

Operating profit of 788 million pounds in the company’s first full year as a standalone company beat a forecast 722 million pounds, according to a company-supplied consensus poll.

Assets under management and administration totalled 367 billion pounds at the end of December, above a forecast 353 billion.

Asset managers St James’s Place and Schroder posted record high funds under management last year, helped by strong investment performance.

M&G shares hit a one-year high and were up 6.8% at 219 pence at 0832 GMT, the top performer in the FTSE 100. JPMorgan Cazenove analysts described the results as “strong”, reiterating their “overweight” rating.

M&G said it would pay a second interim dividend of 12.23 pence per share.

($1 = 0.7231 pounds)

(Reporting by Carolyn Cohn; Editing by Rachel Armstrong and David Evans)