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.

Mona Dohle
Mona Dohle speaks German and Dutch, she is DACH & Benelux Correspondent for InvestmentEurope. Prior to that, she worked as a journalist in Egypt and Palestine. She started her career as a journalist working for a local German newspaper. Mona graduated with an MSc in Development Studies from SOAS and has completed the CISI Certificate in International Wealth and Investment Management.

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