Aegon has announced an agreement to acquire BlackRock’s UK defined contribution (DC) platform and administration business.
Paul Bucksey from BlackRock will be appointed managing director of the combined workplace business, which brings together the complementary capabilities of both propositions to offer DC services to schemes of all sizes and types.
The transaction is subject to customary closing conditions and a Part VII transfer of the underlying assets and liabilities to Aegon, which is subject to regulatory and court approval. The financial impact of the transaction is not material to BlackRock earnings.
Aegon says the deal means it now has strong capabilities in the trust-based and investment-only sectors to complement its existing expertise in contract based schemes and says having a complete suite of workplace solutions that includes ISAs, GIAs, guarantees and Sipps will appeal to employers seeking additional solutions.
Platforum says the acquisition, which would put Aegon’s on-platform assets at around £30bn, would make it the fourth biggest in size, behind Aviva/Friends Life, L&G and Standard Life, but ahead of Scottish Widows in 5th position.
BlackRock will continue to serve the UK DC market through its core focus of bringing investment solutions to market, and sees growth potential for the £65 billion of UK DC investments it currently manages.
Aegon UK CEO Adrian Grace says: “The combined strength and breadth of expertise makes us a compelling choice. With employers demanding additional solutions to meet employees’ needs to and through retirement, workplace savings are no longer just about traditional DC pensions.
“This makes it an exciting market and with an expectation it will triple in size over the next 10 years, we are well positioned to take advantage.”
The transaction deepens Aegon’s relationship with BlackRock, who continues to be a key partner providing investment management for Aegon clients. BlackRock’s renowned strength as a leading investment manager means it retains its role as the primary investment manager for the clients who will transfer to Aegon as part of the transaction.
BlackRock EMEA head David Blumer says: “The pensions and investment landscape has changed significantly in the UK over the last few years. BlackRock believes Aegon’s broad retail product and digital capabilities
will best serve the increased demand from employers for holistic retirement solutions in the future, and are a perfect partner to deliver on our DC platform and administration clients’ growing needs.
“Following the transaction, BlackRock will continue to grow its DC Investments Business by providing market leading investment products to DC schemes, consultants, master trusts and pension providers.”
Platforum senior researcher Miranda Seath says: “Aegon’s acquisition of Blackrock’s defined contribution platform would make it the fourth largest by AUM in UK DC pensions. Blackrock’s bundled DC business provides pensions for some 125 firms in the UK and targets medium to large employers with high average contribution levels.
“Aegon’s acquisition of BlackRock will broaden its reach from its current heartland of SME’s to larger firms supporting its strategy of targeting firms with ‘decent’ minimum contributions
“BlackRock has invested in digital tools to drive engagement – myPath, a decumulation modeller comparing income choices and CoRI a lifetime retirement income modeller – Aegon’s also takes a digital first approach through its slick front- end Retiready. And BlackRock launched a drawdown service in November 2015, allowing members to move ‘to and through’ retirement on the platform – a strategy that closely mirrors Aegon’s.”