Legal & General has reached a deal to buy the 75 per cent of Cofunds that it did not already own for £131m.
The long-awaited deal values Cofunds at £175m and the cost is much lower than the £200m predicted when it was first reported that L&G was interested in Cofunds in 2011.
Cofunds will retain its own separate brand name but Legal & General said the “clarity of single ownership structure will enable Cofunds to grow assets and revenues while achieving operational leverage with a more efficient cost base”.
Cofunds is the biggest platform in the UK, with £50bn of assets under administration and a 22 per cent market share of the investment platform market.
L&G previously held a 25 per cent stake in Cofunds along with other asset managers and financial services firms such as Jupiter, Threadneedle and IFDS.
Mark Gregory, the chief executive of the savings division 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 IPS, provides us with the scale and capability to be a major player in this important and growing market.”
Darius McDermott, managing director of Chelsea Financial Services, said he hopes the deal will lead to greater investment in the business to help it maintain a market-leading position in the platform space.
He said: “Cofunds have had to concentrate on the advisory side of the business, readying for RDR, and we hope that this now means some committed resources and renewed focus on their execution-only/non-advised area, particularly in respect of the pension offering.
“At the same time, my preference would be for Legal and General to leave it as a stand-alone business and not integrate it too much into the wider company framework.”
