Legal & General (L&G) has bought a 25% stake in the UK's largest independent fund supermarket, Cofunds.
Subject to regulatory approval, L&G will invest £18.6m, which will see the company become Cofunds largest shareholder and hold a seat on the board. Shareholders have also committed a further £7m facility to be drawn down as required and are converting their existing loans to Cofunds into equity. This should provide sufficient capital to see the company through to profitability.
Commenting on the deal, L&G group director (retail distribution), Kate Avery, said: "Where as other groups have to spend £40m to £60m building platforms with external links to fund managers, in Cofunds we have aligned ourselves with a major player in that market at a fair price." L&G is one of the few life offices without existing external fund links.
Cofunds marketing and development director, Mark Jones, said: "This is a logical extension to our platform, we asked intermediaries what they felt we needed to improve and they asked for an onshore unit-linked life bond and personal pension.
"We also wanted to remain consistent with the principles of a fund platform - an open architecture of investment funds."
Commenting on L&G having a seat on Cofunds board, Avery said: "The real premise behind having a seat on the board is ensuring we are happy with the company's direction." Other shareholders in Cofunds include IFDS and BFDS (24%), Newhouse Capital (18%), Jupiter (15%), Threadneedle (15%) and M&G (3%).
Darius McDermott, managing director of Chelsea Financial Services, commented: "We have millions of our client's money with Cofunds and this news reinforces our already strong relationship."
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress