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Legal & General is doubling down on its asset management business as it seeks to expand internationally and sell more private-market products to customers ranging from pension schemes to wealth managers.
António Simões, chief executive of the FTSE 100 company, which oversees £1.1tn of assets, is planning to tell investors at its capital markets event on Tuesday that its investment unit is “the core engine for growth”.
“I’ve tied the future of L&G into the future of asset management,” Simões told the Financial Times. Last year he merged L&G’s private markets business with its fund management division as part of a sweeping restructuring just months after he took on the top job.
The chief executive’s comments come as other insurance groups have sold or shrunk their asset management business because of fierce competition and dwindling returns from stockpicker-led funds.
French insurer Axa last year opted to sell its asset manager to BNP Paribas to create a “European champion” that could compete in an industry that is increasingly being dominated by big global firms. British insurer Aviva shrunk its active equities unit in recent years to focus on other parts of investment management and insurance.
Eric Adler, chief executive of L&G’s asset manager, told the FT that he is hoping to expand the investment business so that international assets represent more than 50 per cent by 2028, up from 44 per cent.
L&G acquired US real estate investor Proprium as part of its push into the US, the FT previously reported, where the group has more than £200bn of assets under management.
L&G will also tell investors that it is focused on a “barbell” approach of growing its private assets funds, which tend to come with higher fees than public equity products, as well as its low-cost index-tracking business in which it is a large player in the UK.
However, competition in private assets is heating up as more traditional asset managers shift into the sector in an effort to generate more income.
“There’s not a single asset manager that doesn’t want to be big in private assets,” said one financial services analyst. “António will need to show that L&G has the right to win.”
Investors had sought more disclosure on revenue generated by L&G’s private capital businesses, such as private debt manager Pemberton, the analyst said.
Shares in L&G are trading at around the same level as when Simões became chief executive in January 2024.
The group will provide more detail on Tuesday on its plans to reach £500mn-£600mn of operating profit by 2028, by focusing on generating higher fees from product sales and savings from cost cuts, while pushing further into private markets to reach more than £85bn of assets under management.
That growth target would look more attractive if a substantial chunk were to come from fees on third-party funds, the analyst said, rather than just from its own balance sheet.