Cofunds bosses are remaining tight lipped about what Legal & General’s sale of its self-invested personal pension business last week mean for the platform.
On Friday (15 January), L&G announced an agreement to sell Suffolk Life to Curtis Banks in a deal worth £45m.
Suffolk Life was acquired by L&G in 2008 and since then has grown to administer approximately 26,500 Sipps, including more than 3,600 commercial properties, with assets under administration of £8.7bn.
The deal is subject to an underwritten placing by Curtis Banks Group and regulatory approval, both of which are expected in the first half of 2016.
Part of L&G’s statement on the deal noted it is disposing non-core businesses and focusing on core activities where it believes significant scale and attractive returns on capital can be achieved.
Group chief finance officer Mark Gregory said while Suffolk Life was a great business, “it is not core to our focused strategy”.
Last year this strategy saw L&G sell off its offshore bond operation to Canada Life’s parent company Great-West Lifeco in February, along with Irish and Egyptian divisions. Earlier this month, it also completed talks with Apicil to sell its French business.
Rumours abounded last summer that L&G was looking to sell Cofunds, and both FNZ and AJ Bell were said to be in the frame to buy, although ultimately no deal was done.
Following the sale of Suffolk Life, a spokesman for L&G said the group does not comment on market rumour or speculation about the future of Cofunds.
They pointed to a third quarter statement last year which mentioned “as part of a strategic review of our digital savings business we will focus on improving operational efficiency in Cofunds”.
A spokeswoman for Cofunds also declined to comment on speculation about what the future holds for the platform.
Mike Barrett, consultancy director at financial services consultancy Lang Cat, said the thousands of advisers who use Cofunds will be looking at the sale of Suffolk Life with interest. “As the largest platform in the UK, Cofunds have already achieved this, however it is fair to say the proposition needs investing in.
“We are hearing of a few new developments in the pipeline, and Cofunds have already confirmed that the Cofunds Pension Account will continue to be provided by Suffolk Life, all of which will no doubt reassure advisers.”
Heather Hopkins, research director at Platforum, said the Suffolk Life sale was sure to have implications for the future of Cofunds. “We hope that L&G will continue to invest in the Cofunds business. We were pleased to see the announcement that Marc Balustrade was joining Cofunds as chief operating officer last week, indicating continued investment in the business.”
Platforum’s data at the end of September showed Cofunds had grown its assets under administration by 5.88 per cent year on year. However, of the top three platforms by assets - Cofunds, FundsNetwork and Old Mutual Wealth - its growth was the lowest from the third quarter of 2014 to the same period in 2015.
Cofunds’ assets under administration declined by 2.17 per cent in the third quarter, while the platform sector as a whole saw an asset decline by 0.84 per cent. Its net sales were significantly up from £361.6m in the second quarter last year to £1.42bn in the third, rebounding to third quarter 2014 levels.
peter.walker@ft.com
