Two investment management firms have revealed they will be merging, creating one of the largest specialist lending businesses in Europe.
According to a market update published today (24 May), Pollen Street Capital and MW Eaglewood are set to combine.
Pollen Street will become the majority shareholder of the combined investment management entity, and the Marshall Wace group, which Eaglewood is part of, will keep a substantial shareholding.
Eaglewood currently manages the £722m FTSE 250 trust, P2P Global Investments, which will now be managed by the combined business.
The two firms will now work to implement a more flexible investment strategy for the trust, tapping into a wider spectrum of opportunities and allowing more exposure to sterling-denominated assets.
The portfolio will also be realigned, while the performance is targeted a return of 6 to 8 per cent over the next 18 months.
This follows concerns about the transparency of peer-to-peer lending trusts, with P2P Global embarking on a review of its management arrangements after it suffered a bout of poor performance.
Ian Wace, chief executive of Marshall Wace, said: "The board of the trust challenged us to come up with a strategic solution for the management of the trust and to enhance returns.
“We accepted their challenge and the result is an outcome which is truly transformative, creating a major new industry player.”
The P2P Global Investment trust is also set to revise its fee structure so it is geared more towards performance, rather than the amount of assets.
The changes, which start from January next year, mean that investors will have to pay a management fee of 1 per cent of net assets, and a performance fee of 15 per cent for any increase in net asset value.
Existing fee arrangements will continue until then, with investors paying a base fee of 1 per cent of net assets, and a performance fee of 15 per cent over a high watermark.
Established in 2014, the trust invests in small and medium-sized enterprise loans.
Simon Champ, chief executive of Eaglewood Europe, said the market and structure for non-bank lending has changed “immeasurably” since the trust was created.
He said the combination of MW Eaglewood and Pollen Street boosts the manager’s skill-set, equipping the companies for the evolving industry.
katherine.denham@ft.com
