Hedge fund operator Man Group has bought London-based property investment manager Aalto Invest for up to $205m (£166.80m) in order to reduce its reliance on its main AHL fund.

The deal, which will see $25m (£20.35m) cash and shares up front and also include three further payments totalling $180m (£146.51m) over the next eight years, will add $1.7m (£1.38m) worth of assets to the company.

Man’s chief executive, Luke Ellis, said the acquisition is a key step in the development of Man Global Private Markets, the group’s new investment engine for private asset classes, and in the diversification of the company.

He added: “The acquisition of Aalto represents an attractive opportunity for clients, who will have access to longer term investment strategies offering a complementary risk reward profile to our current products.”

Mikko Syrjänen and Petteri Barman, the founders of Aalto, will become co-heads of real assets within Man Global Private Markets.