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L&G closes in on Cofunds acquisition

Legal and General LG 480

Legal & General is set to acquire Cofunds following months of negotiation between the businesses, Money Marketing understands.

L&G currently holds a 25 per cent stake in the platform business while International Financial Data Services, Threadneedle, Newhouse Capital Partners and Jupiter all have significant stakes.

In November 2011 it was reported that L&G was preparing a £200m bid for Cofunds but it is understood that a deal is now close to being reached.

Martin Davis
Cofunds chief executive Martin Davis

It is thought that Cofunds senior management would continue steer the platform under L&G’s ownership.

Cofunds sales and marketing director Alastair Conway last week announced he was to leave the business in April after five years with the platform. His responsibilities will be split internally with Verona Smith becoming director of marketing and Andy Coleman becoming director of investor and wealth distribution. Both will report to Cofunds chief executive Martin Davis.

Earlier this month, Money Marketing revealed L&G managing director of platforms and distribution Geoff Towers had changed roles to become managing director of UK and international savings. The move saw L&G’s platform and distribution division fall under the firm’s retail savings division.

In March 2011, L&G ditched its exclusivity deal with Cofunds for the distribution of its bond and pension wrappers, which had been in place since 2005.

The Platforum managing director Holly Mackay says: “Cofunds has expanded away from being a pure IFA business to support both direct and institutional plays as well. As such it feels sensible that it can add more value to a large group looking for an ‘engine’ and a diversification of revenues than it can to disparate fund manager shareholders with varying agendas.”

Cofunds is currently the largest platform in the UK with £45bn assets under administration, as of 30 September 2012.

L&G and Cofunds declined to comment.


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There are 7 comments at the moment, we would love to hear your opinion too.

  1. That really seals it for me. I have noticed that over the past year the service from Cofunds has really deteriorated. I also know that their RDR transition has been a dog’s breakfast. I thought it was teething problems and have persevered.
    Its support of both direct and institutional players was another point that concerned my and was no doubt instrumental in the decisions made which certainly are not to the benefit of advisers or their clients.

    The warning bells rang when I learned that Alistair was leaving.

    Now to discover that L&G – that byword for poor service and even ineptitude it to be in the driving seat makes it all the easier both for me and my clients to decide to move elsewhere.

    By comparison Old Mutual’s full takeover of Skandia looks like Prince Charming on a white charger.

  2. I tend to agree with Harry. We have used Cofunds for over a decade and generally they have been very good.

    But they rather struggled with RDR and if old-model Life Co L&G – with their terrible service and 20th century management – do complete a takeover then platforms like Transact will look a more attractive proposition.

    I suspect this will be the beginning of the end of our relationship with them.

  3. @Harry

    I always thought that Aviva was the by word for poor service and administration, and L&G were at least average. I’m guessing since I left 4 years ago it has got worse.

    As for Cofunds, I worked with the guys and they were always very helpful but they are a volume business with low margins so I guess its hard to have hundreds of staff to help out.

    Somehow I think every life company, service provider is going to do this unless you pay additional for the service due to RDR as they can’t build in a hidden margin.

    Everything will be self service I feel in the future, allowing companies to move the administration to the user and cost of errors to the advisor. Only having a team of specialists to deal with the more advanced queries.

  4. Advisers always seem to show a greater propensity to belly-ache about something that isn’t working for them, than give out plaudits when things are going well… so let me say that in my experience the service provided by Cofunds and L&G is very good so if L&G does buy out Cofunds’ other shareholders I don’t see what there is to fear.

    Of course many adviser problems are caused by poor submission… perhaps we should tidy our own act first.

  5. @Anon 11.03

    If I say so myself my submissions are invariably faultless. If you want evidence of L&Gs humungous ineptitude and abysmal service over the years – you are welcome to come and have a look at my files.

    That being said I do use L&G; their fund management is not too bad. Their charging structure is OK and they are often competitive when it comes to life assurance and annuities. But I did have a full head of hair once upon a time! However if there is an alternative I would rather not use them.

    As to compliments – you may also inspect my e-mails to see my fulsome praise for good service – on a regular basis I’m delighted to say. I’m sure I am not alone in these comments. So I don’t know on what basis you make assumptions. Mine are certainly not assumptions, but provable facts.

  6. Looking at L&G’s share performance over the last 3 years one would hardly say they were a company lead by 20th century managers. I believe there service offering is also rather good. I can see by the comments that not all see it this way but as L&G appear to be continually tweaking there business model to enhance profit I guess some IFA’s will be pushed off the back of the bus, but I rather think this is what L&G are hoping for.

  7. Wholeheartedly BUY BUY BUY L&G Shares this deal will drive L&G share price over the 200pence threshold by Dec 2013, then beware as the FTSE could nose dive up to 35% around Q1 2014. But do then get back in as I can see a fantastic opportunity here especially long term think 350pence+ in 2015 for L&G.

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