First US Investment Management Acquisition

RNS Number : 5970A

Legal & General Group Plc

21 February 2014

 



LEGAL & GENERAL'S FIRST US INVESTMENT MANAGEMENT ACQUISITION - GLOBAL INDEX ADVISORS, INC.

Legal & General Group Plc ("Legal & General" or the "Group") has today agreed to acquire the business of Global Index Advisors, Inc ("GIA"), an Atlanta based investment advisor focused on target date funds ("TDF"). GIA is in the top 5¹ of target date providers in the US. The acquisition, by the Group's subsidiary Legal & General Investment Management America, Inc ("LGIMA"), for a maximum consideration of $50.4m, is expected to complete mid 2014, subject to Fund shareholder approval.

Legal & General has identified international expansion of asset management as one of its five key themes for growth, and with this acquisition LGIMA now has proforma assets which exceed $50bn. The acquisition provides Legal & General with scale and distribution in the $6 trillion US defined contribution ("DC") market, where TDF assets are forecast to double by 2017.² This acquisition underlines the significant potential for Legal & General Investment Management ("LGIM") to grow assets in the DC market in the UK and in the US and further position itself as a market leader in delivering innovative investment solutions.

GIA was formed in 1994 to create and market customer centric index target date fund products for the DC market and is investment sub-advisor to the Wells Fargo Advantage Dow Jones Target Date Funds which have $15.6bn³ of assets.

The initial consideration is $30.75m with deferred consideration of $1.5m payable over the period of 2 years from the date of completion and further payments of up to a maximum of $18.15m payable over 3 years from the date of completion, subject to performance and other conditions being met including additional assets. The maximum cash consideration of $50.4m will be funded from surplus capital held within the Group. The acquisition is expected to be earnings accretive for Legal & General in its first year and is expected to deliver a return above the Group's weighted average cost of capital.

Mark Zinkula, Chief Executive Officer, Legal & General Investment Management 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 Officer, Global Index Advisors, Incsaid:

"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. Wells Fargo is an example of that. The opportunity to work with a company of L&G's calibre and character is a perfect fit for that strategy. L&G's knowledge and resources will allow us to not only reach more customers, but give those customers more innovative retirement solutions."

Wadham Downing, Group M&A Director, Legal & General said:

"We are delighted to announce our first US acquisition and our first in the asset management theme. GIA brings a new dimension to LGIMA and our US DC proposition. With today's announcement on GIA, we have now agreed five bolt-on acquisitions in the last 12 months."

^{1. Morningstar Fund Research Target-Date Series Research Paper 2013.}

^{2. Source: Casey Quirk U.S. DC Demand Model.} 

^{3. As at 31st December 2013.}

-ENDS-

For further information, please contact:

Investor Relations	Bernie Hickman Ian Baker	[phone] [phone]
Media Relations	John Godfrey Richard King	[phone] [phone]

Notes to editors:

1. A TDF also known as a lifecycle, dynamic-risk or age-based fund is a collective investment scheme, often a mutual fund or a collective trust fund, designed to provide a simple investment solution through a portfolio whose asset allocation mix becomes more conservative as the target date (usually retirement) approaches.

2. TDFs are one of the alternatives for Qualified Default Investment Alternatives ("QDIA") as defined by the US Department of Labor.

3. Global Index Advisors, Inc was advised by Kudu Advisers, LLC.

4. Legal & General Group Plc⁴

Established in 1836, Legal & General is a leading provider of insurance, savings and investment management products in the UK.  The Group has a market capitalisation of $23.3bn⁵ and is responsible for investing $738bn worldwide (as at 30 September 2013) on behalf of investors, policyholders and shareholders. We have over seven million customers in the UK for life assurance, pensions, investments and general insurance plans and over one million customers in the US who rely on us for life assurance. In 2012, Legal & General's profits before tax (on the IFRS basis) were $1.8bn; earnings per share were 23.2c and dividends per share 12.7c for the period, an increase of 9%, 12% and 20% respectively.

^{4. $:£ exchange rate 1.67.}

^{5. As at 20th February 2014.}

For more information on Legal & General, please see http://www.legalandgeneralgroup.com/

5. Global Index Advisors, Inc

Global Index Advisors is an SEC registered investment advisor engaged in the business of advisory services in relation to the design and operation of target date fund products for defined contribution plan sponsors and participants.

For more information on GIA, please see http://www.globalindexadvisors.com/

Forward looking statements

Nothing in this announcement should be construed as a profit forecast.  In particular, statements that the transaction will be earnings accretive are not, and do not constitute, a profit forecast and should not be interpreted to mean that Legal & General's or GIA's earnings following the transaction will necessarily match, or be greater than, the historical published earnings of Legal & General or GIA.

This document may contain certain forward-looking statements relating to Legal & General Group, its plans and its current goals and expectations relating to future financial condition, performance and results. By their nature forward-looking statements involve uncertainty because they relate to future events and circumstances which are beyond Legal & General's control, including, among others, UK domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory and Governmental authorities, the impact of competition, the timing impact of these events and other uncertainties of future acquisition or combinations within relevant industries. As a result, Legal & General Group's actual future condition, performance and results may differ materially from the plans, goals and expectations set out in these forward-looking statements and persons reading this announcement should not place reliance on forward-looking statements. These forward-looking statements are made only as at the date on which such statements are made and Legal & General Group Plc does not undertake to update forward-looking statements contained in this document or any other forward-looking statement it may make.

 

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