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Legal & General snaps up Cofunds in £131m deal
by Sarah Miloudi on Mar 26, 2013 at 07:14
Legal & General has agreed to acquire the remaining 75% share capital of Cofunds in a deal worth f £131 million.
Legal & General believes internet solutions will be one of its key drivers of growth in the years ahead and the agreement, which is still subject to regulatory approval, will give the insurer the scale and distribution it needs in the investment platform market.
The deal has been anticipated since 2011, however today Legal & General confirmed it would add to its existing 25% Cofunds interest by acquiring the outstanding 75% share capital it does not already own.
Legal & General was already the largest shareholder prior to this morning's announcement, with the likes of International Financial Data Services, Threadneedle and Jupiter Investment Management also invested.
Unveiling the deal, Legal & General said assets under administration (AUA) in the platform space are set to double by 2017, and Cofunds is the UK's largest platform for financial services with over £50 billion of AUA and a share of 22% of the market. Its shares rose 1.37% to 170p on the news.
Mark Gregory, chief executive officer of savings at Legal & General, said: 'The projected growth in the investment platform market is substantial and we expect Cofunds to be a major beneficiary of this growth.
'Cofunds, alongside our existing platform Investor Portfolio Service, provides us with the scale and capability to be a major player in this important and growing market.'
Cofunds will retain its focus as a whole of market platform, serving both retail and institutional clients with its competitive charging structure.
It will remain a separate brand in the UK platform market, though the clarity of a single ownership structure will enable Cofunds to grow assets and revenues with a more efficient cost base.
The deal is expected to be completed within the first half of this year and should bring about cost savings of £11 million a year, kicking in from 2015 onwards.
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