L&G cheers push into private credit as profit rises
Key Takeaways
- •Private markets assets under management increased to £79bn, up by more than a fifth, driven by growth in private credit, real estate and infrastructure funds.
- •Legal & General plans to raise investment in private markets over the next two years and target more than £85bn of assets under management by 2028.
- •Core operating profit rose 7% to £918m in the first half, while core operating earnings per share increased 11% to 12.1p.
- •Profit before tax climbed to £1,997m from £406m, reflecting gains from the sale of the company’s US business.
- •The board declared a 2% increase in the interim dividend to 6.2p per share and said £450m of its £1.2bn buyback programme has been completed.
Legal & General reported higher profit as its asset management arm stepped up its push into private credit and other private markets.
The FTSE 100 firm highlighted “continued fundraising success” across its private markets investments and said it plans to increase investment over the next two years, as large insurers and asset managers increasingly look to areas such as private credit, real estate and infrastructure to broaden fee income and support capital-light growth.
Total private markets assets under management (AUM) rose by more than a fifth to £79bn during the period, L&G said, with growth across private credit, real estate and infrastructure funds.
The company has set a target to exceed £85bn of private markets AUM by 2028.
“The continued expansion of private markets demonstrates the growing depth and diversification of the platform,” L&G said.
“Growth across private credit, real estate and infrastructure funds…strengthens L&G’s institutional and wealth proposition and supports the longer-term shift towards higher margin, capital-light growth.”
Profit rises
The asset management and insurance group said core operating profit, which excludes corporate investments, increased 7 per cent to £918m in the first six months of the year, broadly in line with analyst expectations.
Core operating earnings per share rose 11 per cent to 12.1p, beating group guidance of 6 to 9 per cent.
Profit before tax increased to £1,997m from £406m, reflecting gains from the sale of its US business.
Buyback and dividend update
The FTSE 100 group said it has completed £450m of its £1.2bn share buyback programme. It plans to return £5bn to shareholders by 2027.
The board also declared a 2 per cent increase in the interim dividend to 6.2p per share.
Institutional retirement wrote £5.7bn in global pension risk transfer (PRT) deals during the period. In the UK, it wrote £3.5bn in schemes, although the company said it now expects lower market volumes in the second half of the year than previously anticipated.
L&G’s retail channel posted £198m in profit before tax, supported by higher contributions from its retail retirement business and an improved workplace performance.
Workplace defined contribution flows rose to £6.2bn, while retail annuity sales increased 36 per cent to £1bn.
L&G shares fell 1.2 per cent to 299p in early trade on Wednesday. The stock is up more than 15 per cent since the start of the year.
