Large-scale company Legal & General outlines strategies for asset management within FTSE 100 index.
Legal & General's asset management division is gearing up for a major expansion, outlining a fresh growth strategy targeting over £500m in operating profit by 2028. With a current asset base of £1.1 trillion, the firm aims to increase its profitability, marking a significant leap from the £400m achieved in 2024.
Eric Alder, CEO of Legal & General's asset management division, emphasizes the strategic advantage of the firm's synergy with the broader L&G Group as global demand for sophisticated investment solutions surges. By leveraging its balance sheet as a permanent source of capital, Legal & General hopes to catalyze new fund strategies and fuel fee growth across the Group.
In light of other firms such as French Insurer Axa and British insurer Aviva scaling back their asset management operations, Legal & General is poised to seize the opportunity, focusing on US operations and expanding operations across private markets, wealth, and wholesale. The company's recent acquisition of US real estate investor Proprium demonstrates its commitment to fortifying its presence in the US market.
Legal & General is also tempting fate with its Private Markets Access Fund, which has rapidly grown to nearly £1bn in under a year. The company is targeting an impressive increase in private markets assets under management (AuM) from £57 billion in 2024 to over £85 billion by 2028.
Analysts are backing Legal & General's stock, with Panmure Liberum setting a target price of 335p. The broker expects the group's core earnings per share growth to be between 6% and 9% for 2024, aligning with group expectations. Management is aiming for a cost income ratio of under 70%, a significant reduction from the 74% ratio in 2024, if positive net inflows materialize. The majority of growth is expected to stem from defined contribution pensions and annuity business, offsetting a predicted drop in traditional defined benefit pensions in the UK.
Alder is optimistic about the strategy, highlighting progress made so far, such as the investments in Taurus and Proprium, momentum in private markets, and major client wins. With a clear focus, disciplined approach, and the support of the wider group, Legal & General is confident in its ability to deliver for both clients and shareholders alike.
Investing in more finance opportunities within the business sector is essential for Legal & General's asset management division to achieve its ambitious growth strategy, which aims to generate over £500m in operating profit by 2028. The company also intends to invest in private markets to increase its assets under management (AuM) from £57 billion in 2024 to over £85 billion by 2028.
