Legal & General Group is selling Cofunds, its investment platform for advisers and other financial institutions, to Aegon for GBP140 million.
The acquisition is subject to regulatory approval, which is expected by December 2016.
The sale includes the Investor Portfolio Service (IPS) platform as well as Cofunds’ retail and institutional business. As part of the deal, all employees in Cofunds and IPS will move to Aegon.
Legal & General and Aegon have worked closely this year in delivering three transactions – the acquisition of Aegon’s GBP2.9 billion back book annuity portfolio, the five-year distribution agreement to provide individual annuities to Aegon pension customers, and the acquisition of Cofunds and IPS by Aegon.
Mark Gregory, group chief financial officer of Legal & General, says: “Over the last few years Legal & General Investment Management (LGIM) has developed a market leading international defined contribution pension platform business. LGIM manages GBP50 billion in UK and US defined contribution pension assets, and plans to expand into the DC market of Asia. Cofunds is at the point where it requires a significant upgrade in technology to exploit its leadership position in the UK platform market. We have concluded that this long term commitment is best achieved under Aegon’s ownership as a specialist wealth platform provider.”
The sale of Cofunds and IPS to Aegon does not impact Legal & General’s relationship with Nationwide, the UK’s largest building society.
Legal & General’s Solvency II surplus, as at the 30 June 2016, was estimated at GBP5.3 billion. The sale of Cofunds will increase the Solvency II surplus by GBP125 million, and its Economic Capital surplus by GBP105 million.