Legal & General (L&G) and Cofunds are locked in a battle over the price of the platform as the life company continues its long-running acquisition bid.
L&G has made a £150 million bid for the business, but that has fallen short of the £250 million Cofunds is demanding, according to sources familiar with the situation.
Cofunds chairman Charlie Eppinger (pictured) has contacted Cofunds shareholders about the proposed L&G bid, which has been led by platform and distribution director Geoff Towers, and talks are understood to be ongoing. Both L&G and Cofunds declined to comment.
L&G is the largest Cofunds shareholder, with a 25% stake, followed by fund administrator International Financial Data Services, which owns 24%. Asset managers Threadneedle and Jupiter own 20% and 10% respectively; US venture capitalist Newhouse Capital Partners owns 18% and M&G owns 3%.
A L&G approach to buy Cofunds was first reported by The Telegraph in November last year.
Julian Sunley, director of Hampshire-based Sunley Financial, said he was concerned the takeover would affect Cofunds’ independence.
‘I don’t mind L&G being a 25% shareholder but as a full owner, [I’m not sure]. I would prefer Cofunds to be independent,’ he said.
‘I’m not a fan of life companies owning platforms. I’d be disappointed because I think platforms should be as independent as possible. Platforms should be an administration provider, not a product provider.’
Sunley said there was a danger L&G would use Cofunds to promote its own products. ‘I think it will make a difference and [bring] a bias with L&G’s tax wrappers, like its Sipp wrapper or bond wrappers.’
Arthur Childs, director of Cranleigh-based Arch Financial Planning, who uses Cofunds for smaller clients, agreed that L&G’s potential takeover could lead to it pushing its own products.
‘That’s the danger because when they first owned the 25%, they stuck their own life insurance bond and pension on there. I suspect once L&G own [Cofunds], they can put on what they like,’ he said.
However, Childs said any takeover was unlikely to make him move his clients away from Cofunds.
‘From the user’s perspective, it probably gives a bit more security as these fund platforms cost the earth to run and L&G has deep pockets, so I suspect there won’t be any issues,’ he said. ‘It won’t change what we’re doing.’