The UK's L&G is to acquire Atlanta, GA-based Global Index Advisors, an investment advisor focused on target date funds, for a maximum consideration of $50.4 million.

The UK's Legal & General Group is to acquire Atlanta, GA-based Global Index Advisors, an investment advisor focused on target date funds, for a maximum consideration of $50.4 million.

The acquisition by Legal & General Investment Management America is expected to finalize in mid-2014, subject to fund shareholder approval.

L&G noted that the US defined contribution market is valued at $6 trillion, with TDF assets set to double by 2017. A TDF is a mutual fund in the hybrid category that automatically resets the asset mix of stocks, bonds and cash equivalents in its portfolio according to a selected time frame that is appropriate for a particular investor. Returns are not guaranteed, but depend on how the market performs.

“International expansion and the DC market are two extremely important drivers of future growth for LGIM, and the acquisition of Global Index Advisors today will allow us to accelerate our expansion in the US DC market,” said Mark Zinkula, chief executive at Legal & General Investment Management.

Global Index Advisors was established in 1994 to create and market index TDF products for the DC market and is investment sub-advisor to the Wells Fargo Advantage Dow Jones Target Date Funds, which have $15.6 billion of assets.

The initial consideration for the acquisition is $30.75 million, with deferred consideration of $1.5 million payable over the period of two years from the date of completion, and further payments of up to a maximum of $18.15 million payable over three years from the date of completion - subject to performance and other conditions being met. The maximum cash consideration of $50.4 million will be funded from surplus capital held within the group.

Established in 1836, Legal & General is a provider of insurance, savings and investment management products in the UK.