Legal & General to sell Cofunds to Aegon
Legal & General has announced the sale of investment platform Cofunds to Dutch pension and insurance provider Aegon, subject to regulatory approval.
The £140m (€162.69m) sale includes the Investor Portfolio Service (IPS) platform as well as Cofunds’ retail and institutional business. All employees in Cofunds and IPS will be transitioned to Aegon.
Legal & General acquired a 75% share in Cofunds for £131m (€152.26m), the planned sale is now set to result in a £65m loss, as the Financial Times reports.
In the UK, Cpfunds faces competition among others by Bristol-headquartered Hargreaves Landsdown and US provider Fidelity, which offer similar savings and investment services.
Another possible factor behind the decision could be regulatory pressures, with Legal & General reporting that the sale of Cofunds will increaseits Solvency II surplus by £125m (€145m), and its Economic Capital surplus by £105m (€122.05m). Aegon on the other hand hopes to achieve £60m of annualized cost synergies by moving the Cofunds business onto Aegon technology, and by removing duplication across the businesses. It expects to incur additional one-time expenses of £80m (€92.9m) throughout the transition process.
Mark Gregory, Group CFO of Legal & General, said: “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 is part of a broader cooperation between the two insurance and pensions providers this year, following Legal & General’s acquisition of Aegon’s £2.9bn (€3.37bn) back book annuity portfolio and the 5 year distribution agreement to provide individual annuities to Aegon pension customers.