TIDMLGEN
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 5(1) 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 $15.6bn(3) 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:
Bernie Hickman +44 (0)20 3124 2043
Investor Relations Ian Baker +44 (0)20 3124 2047
John Godfrey +44 (0)20 3124 2090
Media Relations Richard King +44 (0)20 3124 2095
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 Plc(4)
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 $23.3bn(5) 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. $:GBP 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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