A group of private equity investors agreed on Friday to buy Hargreaves Lansdown in a deal that values the Bristol-based investment platform at £5.4 billion.
The deal for Hargreaves Lansdown is the latest high-profile exit from the London Stock Exchange amid the relatively cheap valuations of London-listed shares.
Hargreaves Lansdown is unanimously recommending shareholders support the offer by CVC Capital Partners, Nordic Capital and a subsidiary of Abu Dhabi Investment Authority (ADIA).
The price of £11.40p per share in cash includes 30p for the 2024 final dividend, and represents a 54.1% premium to Hargreaves Lansdown’s closing price on April 11, the last business day before the group’s initial approach to the board.
Hargreaves Lansdown is the UK’s biggest platform for retail investors, according to Bloomberg, with almost 1.9 million customers and £155 billion in assets under management and administration. But in recent years rivals like Salford-based AJ Bell Plc and Abrdn’s Interactive Investor have started to win market share, helped by their lower fees.
The transaction has the support of co-founders and leading shareholders Peter Hargreaves and Stephen Lansdown.
The deal has an option for Hargreaves Lansdown shareholders to choose to invest some or all of their shares alongside the bidders.
The Bristol firm was co-founded in 1981 by Peter Hargreaves and Stephen Lansdown, who together still own about a quarter of the company.
Peter Hargreaves has chosen to co-invest half of his 19.8% stake while Lansdown will sell his entire 5.7% holding.
Hargreaves will get about £535 million and retain a stake in the private company. Lansdown will get about £309 million.
Hargreaves Lansdown chair Alison Platt said: “While the Independent HL Board has been pleased with the progress made by the new management team, the Independent HL Board believes that the Cash Offer represents an attractive opportunity for HL Shareholders to realise an immediate and certain cash value for their investment at a level which may not be achievable until the execution of the strategy is delivered over the medium to longer term, and therefore intends to unanimously recommend HL Shareholders vote to approve it.
“We are pleased to see that the Consortium is aligned that HL has an important purpose making it easy for the UK consumer to save and invest for a better future.”
Pev Hooper, Managing Partner at CVC Private Equity Group, Emil Anderson, Partner at Nordic Capital Advisors and Hamad Shahwan Aldhaheri, Executive Director of the Private Equities Department at ADIA, said in a joint statement: “HL has an important purpose: to make it easy for people to save and invest for a better future. Over the 40 years since it was founded, HL has built a strong, trusted brand, underpinned by high levels of customer loyalty and advocacy.
“As a consortium, we are aligned with management that, despite these strengths, the company now requires substantial investment in an extensive technology-led transformation to improve HL’s proposition and resilience, and to drive the next phase of HL’s growth and development.
“The Consortium brings extensive experience in supporting businesses undergoing transformation, and its members have long records of investing in regulated financial services companies to build better businesses and create better customer experiences.
“We look forward to partnering with HL’s management to accelerate its transformation plan – including investment in technology infrastructure, digital channels, and service enhancement – all with client value, service, speed of innovation, and HL’s clear purpose at the core.”