Legal & General Group has announced the sale of Cofunds, its investment platform for advisers and other financial institutions, to Aegon for £140m.

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

The sale includes the Investor Portfolio Service (IPS) platform as well as Cofunds’ retail and institutional business. All employees in Cofunds and IPS will be transitioned to Aegon.

Legal & General and Aegon have worked this year in delivering three mutually beneficial transactions: the acquisition of Aegon’s £2.9bn back book annuity portfolio, the five-year distribution agreement to provide individual annuities to Aegon pension customers, and the acquisition of Cofunds and IPS by Aegon.

Mark Gregory, group chief financial officer of Legal & General, said: “Over the last few years Legal & General Investment Management (LGIM) has developed a market leading international defined contribution pension platform business. LGIM manages £50bn in UK and US defined contribution pension assets, and plans to expand into the DC market of Asia. Cofunds is at the point where it requires a significant upgrade in technology to exploit its leadership position in the UK platform market.

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

The sale of Cofunds and IPS to Aegon does not impact Legal & General’s relationship with the Nationwide Building Society.

Legal & General’s Solvency II surplus, as at the 30 June 2016, was estimated at £5.3bn. The sale of Cofunds will increase the Solvency II surplus by £125m, and its Economic Capital surplus by £105m.