Platform boss reckons big players are looking to sell

Platform boss reckons big players are looking to sell

One platform chief executive has suggested that speculation around the sale of both Legal and General and Axa’s platform businesses signals a move by providers away from the market.

Speaking to FTAdviser, Novia boss Bill Vasilieff commented that work on a possible sale of French insurer Axa’s UK arms has been going on for months.

“Elevate’s doing OK, but it’s burning through cash from the parent company, so they’re looking to cut ties,” he explained.

“The trend seems to be for larger platforms to put investment management guys in charge, look at Standard Life and Old Mutual Wealth, because ultimately they see the businesses as ways to sell funds.

“But given how expensive it is to run a platform, some of these institutions appear to be re-thinking the strategy.”

FTAdviser sister paper Financial Adviser reported earlier this week that Barclays has been appointed to handle the Axa sell off, which is being driven by the group’s focus on growing regions and emerging markets, rather than the heavily-regulated UK market.

Chris Beauchamp, senior market analyst at IG, stated that it looks like “a sensible move” in recognition that the UK isn’t a prime area for the firm.

“Having acquired a raft of businesses, the firm is now looking to rationalise, and I think the falling margins make the decision even more prudent,” he added.

A spokesperson for Axa declined to comment.

Axa’s platform Wealth Elevate saw assets under administration up 20 per cent or £1.72bn year-on-year in June, with the Platforum’s research director Heather Hopkins sticking up for the division.

“Elevate is much maligned by competitors as lacking direction and has a reputation for being difficult to work with. However, the adviser platform outperformed competitors in AUA growth in Q1 and Q2.”

Meanwhile, rumours continue to abound that L&G is looking to offload its market-leading - in assets under administration - platform Cofunds, with the latest suggestions being that AJ Bell and FNZ have both separately held talks with the provider.

Spokeswomen for both L&G and Counds confirmed that there was no comment on such speculation.

L&G acquired the fund supermarket two years ago in a deal which valued it at £171m, however since then it has undergone business wide cost cutting aimed at making savings of £80m this year.

Previous statements explained that the insurer was aiming to make savings of £11m in Cofunds during 2015, with 2014 results demonstrating £7m worth of cuts were made by the end of last year.

The same report showed Cofunds posting a pre-tax profit of £7.7m, although net inflows halved from £10.1bn in 2013 to £5.4bn in 2014.

David Hobbs, chief executive of Cofunds, commented at the time that “there’s still much work to be done as we recognise that a business of our scale should be generating more profit”, adding “through working even more closely with our Legal and General Group colleagues, we expect to see greater benefits for our clients and increased efficiencies.”