Schroders is to acquire specialist pan-European hotel investment and management business Algonquin, expected to bring over €1.8 billion (£1.5 billion) in assets under management.
Duncan Owen, global head of real estate at Schroders, said: 'This acquisition complements Schroder real estate's existing focus in sectors including offices, retail, logistics, self-storage and large multiple use sites.
'Our strategy has been to concentrate on what we define as winning cities which benefit from key structural themes of urbanisation, changing demographics, technological innovation, the shifting demand from Asia and strong infrastructure.'
The purchase, for an undisclosed sum, will be added to the company's private assets and alternatives business, which currently has £33 billion in AUM.
The division includes securitised credit, private equity, infrastructure, insurance-linked securities, SME lending and real estate businesses.
As part of the deal, Schroders is also acquiring a number of co-investments alongside Algonquin's existing clients.
Algonquin was set up in 1998 and invests in hotels with its own capital and directly manages them.
Jean-Philippe Chomette, founder of Algonquin, said: 'Becoming part of Schroders, a FTSE 100 global investment management business, provides Algonquin with access to new assets, a broadly based real estate team with 13 offices across five continents and an enhanced proposition for clients.'