L&G to battle buyout group for Cofunds

LEGAL & General and private equity house Bridgepoint are set to battle it out for control of investor supermarket Cofunds.

The insurer, which is the largest shareholder with a 25 per cent stake, has expressed its interest to Cofunds and Mark Gregory, the executive director of savings at L&G, recently approached Cofunds chairman Charlie Eppinger with a written proposal.

Tim Breedon, the chief executive of Legal & General, wants to build its fund platform before he retires from the insurer at the end of 2012.

Potential bidders for Cofunds have been told, however, that a full sale process will not begin until next year, City A.M. understands. A deal could value the business at up to £200m.

Bridgepoint is not thought to be actively preparing a bid but it could open formal discussions with the board of Cofunds in the New Year.

The private equity giant is best known for its investment in high street brands such as Fat Face and Pret A Manger but does have experience in financial services. In 2006 it sold its interest in wealth manager Tilney to Deutsche Bank for a reported £250m profit.

A deal for Cofunds could prove complex, however, given the stakes held by institutional investors. As well as Legal & General, technology provider IFDS owns 24 per cent and US investor Newhouse Capital owns 18 per cent. British fund managers Threadneedle and Jupiter own 20 per cent and 10 per cent respectively and Prudential owns three per cent of shares. Bridgepoint and Legal & General declined to comment.

Cofunds, which has £34bn under administration, said it did not comment on “market speculation”.