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LONDON (Alliance News) - Legal & General Group PLC Friday expanded its investment management arm in the world's largest economy, buying up Atlanta-based Global Index Advisors Inc for up to USD50.4 million.
The British insurer had wanted to expand its international investment management operations to help drive growth, and the Global Index deal, its first acquisition in the US, means its US investment management unit now has proforma assets of over USD50 billion. It said the acquisition will give it scale in the USD6 trillion US defined contribution market.
In a statement, Legal & General said it will pay USD30.75 million initially, a further USD1.5 million over the two years following completion, and up to USD18.15 million more over the three years following completion, subject to the performance of Global Index and its ability to grow assets.
It expects the deal to complete in mid-2014, and expects it to boost its earnings in the first year. It said it also expects the acquisition to deliver a return above its current weighted average cost of capital.
This acquisition underlines the significant potential for Legal & General Investment Management to grow assets in the defined contribution market in the UK and in the US and further position itself as a market leader in delivering innovative investment solutions," it said in a statement.
"We are delighted to announce our first US acquisition and our first in the asset management theme. Global Index Advisors brings a new dimension to Legal & General Investment Management America, Inc and our US defined contribution proposition. With today's announcement on Global Index Advisors, we have now agreed five bolt-on acquisitions in the last 12 months," said Wadham Downing, Legal & General's M&A Director.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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