Legal & General acquires Cofunds Holdings

Legal & General, which provides insurance and investment services, has agreed to acquire a 75 per cent interest in UK fund platform Cofunds Holdings for 131m pounds.

Cofunds will be paid for using Legal & General's existing cash resources and will boost the company's digital offering, identified as a key driver of growth.

Legal & General said the acquisition will provide the company with scale and distribution in the investment platform market where assets under administration (AuA) are forecast to double by 2017.

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Cofunds, the UK's largest investment platform for financial services, has over £50bn of AuA and a share of 22% of the market.

The transaction is expected to be complete in the first half of this year and earnings accretive by the end of 2014.

Cofunds and investor portfolio service (IPS) will form a new business unit within the savings division.

The cost synergy benefit is anticipated to be £11m per annum from 2015, with a one-off investment cost of around £17m.

Cofunds will remain a separate brand in the UK investment platform market.

"As we said at our preliminary results, digital solutions is one of our five drivers of growth," said Legal & General's Chief Executive Officer of Savings, Mark Gregory.

"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 IPS, provides us with the scale and capability to be a major player in this important and growing market."

RD