A London Hedge Fund Giant Is Looking to Build Low-Income Homes

(Bloomberg) -- An acute shortage of subsidized housing for low-income families in the U.K. is drawing some unexpected investors.

Man Group Plc, the world’s largest publicly traded hedge fund manager, is poised to start a fund to finance construction of affordable homes, according to a person with knowledge of the matter. Man has hired former Cheyne Capital Management (U.K.) LLP partner Shamez Alibhai to run the pool, the person said, asking not to be identified because the information is private.

Man Group and Alibhai declined to comment through representatives for the firm.

The hedge fund will join investors such as buyout firm Blackstone Group LP as well as mutual funds in seeking to tap opportunities within the social housing sector as money managers pursue higher yields in the prevailing low-interest rate environment. The stock of affordable housing in the U.K. remains under pressure following a cut in government grants to support new construction and soaring values that are putting home ownership beyond the reach of many families.

More than 1.1 million households were on local authorities’ waiting lists in England for housing as of April 1, according to government data.

Blackstone, the world’s largest private equity investor in real estate, made its foray into the sector by acquiring a 90 percent stake in social housing provider Sage Housing in late 2017. The firm’s strategy is to buy and then rent out lower-cost apartments that developers are required to build alongside private homes.

Alibhai, a former Credit Suisse Group AG executive, joined investment manager Cheyne in 2006 and set up its Social Property Impact Fund in 2014. Under his leadership, the pool of money was used to acquire and build properties for the elderly and people with low incomes or disabilities in the U.K., and then lease the buildings to social-service providers. Following Alibhai left the firm in the final months of the year, around the time that Cheyne moved the pool to sit within the real estate group led by Ravi Stickney.

Man Group, which managed about $114 billion at the end of September, is no stranger to real estate investing. In 2016, it purchased Aalto Invest Holding AG, whose portfolio includes direct investments in U.S. single-family homes as well as commercial and residential properties in Europe.

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