INVESTMENT business Aegon has set its sights on further acquisitions in the UK platform market after buying Cofunds from Legal & General in a £140 million deal last year.

Funding for the move will come from the ongoing sale of the company’s annuities business, which is expected to complete by the end of this year.

The firm, which originally had £10 billion worth of annuities business on its books, has already sold £6bn to Rothesay Life and £3bn to Legal & General, with talks ongoing about disposing of the remaining £1bn.

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“We hope to exit the final £1bn by the end of the year. We will look to sell that to someone but at the moment we haven’t named a party,” said Aegon UK chief executive Adrian Grace.

Mr Grace said the effect of the sale would be to free up more capital, which will allow Aegon to focus on becoming “a consolidator in the platform market”.

“Annuities tie up a disproportionate amount of capital because of the way you manage the assets and liabilities in an annuity portfolio,” Mr Grace said.

“When you don’t have to manage those you can free up capital and that allows you to invest in other things.

“We’ve been pretty clear that we want to be a consolidator in the platform market. There are still 31 platforms out there and we want to have money available to be able to acquire some of those platforms as they become available and we think the pricing is right.”

A platform is essentially a web-based service that allows financial advisers to buy and manage investments on clients’ behalf. Aegon currently operates two platforms, with Aegon Retirement Choices (ARC) focused on pensions while Cofunds is focused on investments such as ISAs.

The business is in the process of migrating all of Cofunds’ customers onto the ARC technology, with the combined platform likely to be rebranded when the process is complete.

Mr Grace said the integration project, which is expected to cost £80m in total, “is on track and on budget”.

“The hope is that the major integration programme will be finished by the end of quarter one next year,” he added.

At the end of the second quarter of this year there was a total of £107bn of assets invested across the two platforms. This was up nearly five per cent from £102bn at the end of the first three months of the year and, according to Mr Grace, was driven both by buoyant equity markets and strong inflows of funds.

In total, the firm saw £3.2bn of net inflows across both platforms, £1.9bn of which went into pensions and £1.2bn into investments.

As the business earns money based on the value of customers’ portfolios the growth in equity markets and inflows also helped boost its profits during the second quarter.

Underlying earnings before tax were five times higher than in the same three-month period last year at €35m versus €7m. First half profits, meanwhile, more than doubled from €30m to €68m.

The performance in the UK arm helped drive much of the growth in Aegon’s European business, which saw underlying earnings rise by 22 per cent to €195m in the second quarter.

This resulted in first half profits rising by 10 per cent to €364m despite a flat first quarter.

Across the entire business second quarter earnings rose from €435m to €535m and first half earnings went from €897m to €1bn.

Global chief executive Alex Wynaendts said the results have come in part as a result of the business cutting its cost base by divesting of a number of businesses.

“I’m pleased that management actions are having the desired effect, particularly the marked improvement in the profitability of our US business,” he said.

He added that Aegon, which is headquartered in Holland, expects to have returned €2.1bn to shareholders in the two-year period ending in 2018.