LONDON, Sept 18 (Reuters) - Legal & General ( LGGNF ) has

agreed to sell its UK housebuilder CALA Group in a deal worth

1.35 billion pounds ($1.78 billion) to an acquisition vehicle

led by U.S. private assets firm Sixth Street Partners, as the

latter steps up its European investment drive.

The British life insurer will receive cash proceeds of

1.16 billion pounds, of which around 500 million pounds will be

paid at closing with the remaining consideration paid over the

next five years on a deferred non-contingent basis.

The sale comes shortly after L&G unveiled a tightened

approach to capital allocation and a decision to create a

corporate investments unit at its capital markets event in June.

The company also said it could use some of the proceeds

to increase returns to shareholders through ongoing buybacks.

"This transaction demonstrates continued momentum in

executing our strategy, simplifying our portfolio to enable a

sharper focus on our core, synergistic businesses," António

Simões, L&G CEO said in a statement.

In June,

Reuters reported

Sixth Street had embarked on the biggest European

recruitment drive in its 15-year history, leasing a new regional

headquarters in London's Mayfair and adding up to 20 employees

this year for a push into private credit and real estate.

Julian Salisbury, co-chief investment officer of the $75

billion global investment firm - which counts a number of

ex-Goldman Sachs ( GS ) stars among its leaders - said he looked

forward to working with co-investor Patron Capital to support

CALA's ongoing growth.

($1 = 0.7598 pounds)