A consortium of private equity groups has offered £11.40 per share for the UK’s largest retail investment platform.
Hargreaves Lansdown, the UK investment platform that pioneered direct stock and fund sales to retail investors, has agreed to a £5.4 billion takeover by a consortium of private equity firms.
The consortium, including CVC Capital Partners, Nordic Capital, and Abu Dhabi Investment Authority, will pay £11.40 in cash for each Hargreaves Lansdown share, including a final dividend of 30p for the last financial year. Shareholders also have an option to roll over their stake into the unlisted company, allowing them to stay invested.
Founded in 1981 by Peter Hargreaves and Stephen Lansdown, the FTSE 100 company grew rapidly by offering individuals low-cost access to funds, stocks, and shares. The company went public in 2007.
Peter Hargreaves, who owns nearly 20% of the company, supports the deal and will sell 50% of his stake, retaining the rest under the new ownership. He will receive £534 million from his share sale. Stephen Lansdown has chosen to sell his entire near-6% holding. Lansdown commented, “As with all such deals, there is plenty of work to do, but I am pleased that we now have certainty and everyone can get on with their lives. It’s a bittersweet moment for me personally, but I feel it is the right time to part company with Hargreaves Lansdown and concentrate on other projects.”
Some large shareholders have criticized the option to retain stakes under the new owners, as it excludes investors unable to hold shares in unlisted companies.
This deal marks Hargreaves Lansdown as the latest company to delist from the London market, joining others acquired by private equity firms viewing UK companies as relatively cheap. Alison Platt, chair of Hargreaves Lansdown, stated that the cash offer is an attractive opportunity for shareholders, which may not be achievable until the strategy execution is delivered over the medium to long term.
The private equity groups indicated that Hargreaves Lansdown requires substantial investment in a technology-led transformation to improve its proposition and resilience, driving the next phase of growth and development.
Shares in Hargreaves Lansdown have declined from a peak of £24 in 2019, partly due to criticism over the cost of its technology overhaul under previous management. Under CEO Dan Olley, who took the role a year ago, the company has refocused on improving its technology. Shares rose 2% to about £11 in early trading on Friday.
Hargreaves Lansdown made its name by selling investments directly to customers rather than through financial advisers, offering tax-efficient products like Individual Savings Accounts and self-invested personal pensions. The company oversees about £155 billion in customer assets and has 1.9 million customers. However, it faced criticism for backing investment manager Neil Woodford as his fund began to falter.
