Aberdeen Asset Management has bought back its former UK property management arm from Australia's Goodman Group for an initial £89m, making it the second largest property fund manager in the UK.

The acquisition of Goodman Property Investors came with a prediction by Martin Gilbert, Aberdeen chief executive, that the property market may have seen the worst of the losses.

He said: "You can never buy at the bottom, so timing these things is always difficult. We are cautious but optimistic as property is still an attractive asset class."

Mr Gilbert described the acquisition as putting Aberdeen Property Investors into the 'big league', taking assets under management up by more than 42% to £24bn, and filling in gaps in the company's coverage of the UK.

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GPI made about £17m in profit last year, according to Mr Gilbert, which he expects to fall to about £10m this year owing to the property market. There will be an extra £12.5m payable over two years depending on the growth in assets under management.

GPI has assets under management of about £7bn, including mandates for pension funds as well as sovereign wealth investor, the Abu Dhabi Investment Authority.

The acquisition will be funded with a placement of 65.1 million shares, increasing share capital by slightly less than 10%. It is expected to be earnings enhancing in the first full year. There was no pre-emption right for the placing, made at a premium of £1.50 a share, but it has the support of a number of big shareholders, including hedge fund Tosca.

GPI was sold by Aberdeen in 2004 to Arlington for £43m, when it had assets under management of £4bn. Aberdeen bought German property fund manager DEGI for £79.2m this year.

(GK/JM)