L&G this week acquired the 75 per cent of Cofunds it did not already own for £131m following months of negotiations between the businesses.
Cofunds is currently the largest platform in the UK with around £50bn in assets, and the deal values the platform at £175m (to be paid for from L&G’s cash reserves).
L&G acquired the remaining stake from International Financial Data Services (IFDS), Threadneedle, Newhouse Capital Partners and Jupiter. Cofunds will form a new business unit within L&G’s retail savings division and retain its branding.
Advisers and platform specialists say Legal & General’s acquisition of Cofunds is proof of how difficult it is for platforms to build value. The Lang Cat principal Mark Polson says: “This shows the squeeze in margins platforms face. When you consider that it has £50bn in assets under administration, the value of the business is nothing compared to that.”
There has been no confirmation on whether all the Cofunds management team, led by Martin Davis, will move across.
L&G chief executive of savings Mark Gregory says: “We have worked with the team over a long period and recognise the excellent value and customer service the platform provides. We look forward to working with them to grow the business.”