Henderson Global Investors has entered into an agreement with the US financial services firm TIAA-CREF to create a £13 billion investment management firm.

The new firm, which will be called TIAA Henderson Global Real Estate, will combine TIAA-CREF's European real estate business and Henderson's European and Asia Pacific property business worth £ 11 billion, the two companies said. After the merger, the current head of TIAA-CREF's real estate business, Tom Garbutt will become the chairman of the combined entity.

Henderson will hold a 40 per cent stake in the new firm while the remaining will be held by TIAA-CREF. Henderson has also sold its US property portfolio to TIAA-CREF. TIAA-CREF will make 114.2 million payment to Henderson for their US property business, and for a 60 percent stake in the new venture. Following the merger, the North American business and the joint venture will have £41.5 billion assets under management and will become the fifth largest property fund manager in the world.

Garbutt said, "The geographic footprint is complementary - with Henderson big in Europe and Asia and TIAA-CREF in US - this enhances the proposition for our clients many fold."

Henderson chief executive Andrew Formica said that the Henderson had earlier indicated that its property business would benefit from greater scale and access to capital for future growth.