Legal and General has sold its Investor Portfolio Service (“IPS”) platform as well as Cofunds' retail and institutional business to Aegon for £140m.

The FTSE 100 insurer paid £131m for 75% of Cofunds in May 2013, meaning the net loss on the disposal amounts to £65m.

Cofunds provides financial advisers with access to more than 2,100 funds as well as administration services to manage portfolios on behalf of clients.

L&G says the sale will boost its Solvency II surplus by £125m.

All employees in Cofunds and IPS will be transitioned to Aegon.

The acquisition is subject to regulatory approval, which is expected by December 2016.  

“Cofunds is at the point where it requires a significant upgrade in technologyto exploit its leadership position in the UK platform market,” said Mark Gregory, chief financial officer at Legal & General

“We have concluded that this long term commitment is best achieved under Aegon's ownership as a specialist wealth platform provider."

Shore Capital analyst Eamonn Flanagan said he views the deal as an "excellent outcome" for Legal & General given the IT spend he believe the group was going to have to commit to in the coming years in terms of modernising Cofunds’ offering.