Legal & General Group Plc has agreed to acquire the business of Global Index Advisors Inc, an Atlanta-based investment advisor focused on target date funds, for a “maximum consideration” of $50.4m (£30.3m).
The acquisition, by the group’s subsidiary Legal & General Investment Management America Inc is expected to complete mid 2014, subject to fund shareholder approval.
GIA is in the top 51 of target date providers in the US, L&G said.
The company said the acquisition provides it with scale and distribution in the $6,000bn (£3,606bn) US defined contribution market, where TDF assets are forecast to double by 2017.
A TDF, also known as a lifecycle, dynamic-risk or age-based fund is a collective investment scheme designed to provide a simple investment solution through a portfolio whose asset allocation mix becomes more conservative as the retirement date approaches.
L&G said the acquisition underlines the “significant potential” for Legal & General Investment Management to grow assets in the DC market in the UK and in the US.
The initial consideration is $30.75m (£18.5m) with deferred consideration of $1.5m (£900,000) payable over the period of two years from the date of completion and further payments of up to a maximum of $18.15m (£11m) payable over three years from the date of completion, subject to performance and other conditions being met including additional assets.
The maximum cash consideration of $50.4m (£30.3m) will be funded from surplus capital held within the group.
Mark Zinkula, chief executive at LGIM, said: “International expansion and the DC market are two extremely important drivers of future growth for LGIM, and the acquisition of Global Index Advisors today will allow us to accelerate our expansion in the US DC market.
“We are delighted to be working with Jim and his team who have been pioneers in this area and believe the opportunity to expand the business is significant.”
Jim Lauder, chief executive of Global Index Advisors Inc, added: “We are excited to become part of LGIMA and the Legal & General Group. Our business model has always been about partnering with industry leaders possessing a strong desire to do the right thing for customers.”