Hargreaves Lansdown backs £5.4bn private equity takeover

The board of Hargreaves Lansdown said it was willing to “recommend unanimously” a takeover offer from private equity firms that would value the UK’s largest investment site at £5.4bn.

The company said a consortium of private equity funds led by CVC Capital Partners had returned with an offer of £11.40 a share after its previous approaches were rejected.

Hargreaves Lansdown said it had requested to extend the timeframe by which the private equity firms must make an official offer beyond the original deadline on Wednesday, under UK takeover rules.

It added on Tuesday that the new bid “is at a value that the board would be willing to recommend unanimously to Hargreaves Lansdown shareholders, should a firm intention to make an offer [ . . . ] be announced”.

Should the bid be successful it would mean yet another company delisting from London’s capital markets, which have suffered an exodus as private equity firms and other bidders pick up relatively cheap companies. Meanwhile, other British companies are considering a US listing in an attempt to improve valuations.

The bidding private equity companies, which include Nordic Capital and Platinum Ivy, a wholly owned subsidiary of the Abu Dhabi Investment Authority, have already made three previous approaches, Hargreaves Lansdown confirmed. The consortium has until July 19 to make a firm bid, at which point it will lay out its plan for the business.

The latest approach follows a difficult few years for Hargreaves Lansdown, as costs have escalated under previous management while customer inflows have slowed. Shares in the business dropped from a peak of £24 in 2019 to as low as £7 earlier this year.

Peter Hargreaves, co-founder and the largest shareholder in the company, told the Financial Times: “It’s a disgrace that it’s come to this. It was classified as one of the best-run companies in the UK 10 years ago.”

Hargreaves, who has a stake of nearly 20 per cent, said he wanted to make sure Hargreaves Lansdown’s chair, Alison Platt, “thinks it is the right price”.

The latest offer of £11.40 comprises a final dividend of 30p for 2024 and an option for Hargreaves Lansdown shareholders to reinvest their stock in the private equity group’s unlisted vehicle.

The price offered is 15 per cent higher than the 985p put forward by the consortium in April, which was rejected by Hargreaves Lansdown’s board in the view that it “substantially undervalues” the company and its prospects.

Analysts at Citi said the deal “allows for shareholders to remain invested in the unlisted vehicle, paving the way for the founders, which together own 26 per cent, to remain invested, in our view”.

The Bristol-based company, known for selling financial products directly to investors, oversees £150bn in customer assets and has 1.8mn customers.

The business was founded four decades ago by Hargreaves and Stephen Lansdown. It recently appointed Platt as chair, while Dan Olley was made chief executive in August last year.

Lansdown, who owns a stake of about 6 per cent, told the FT over the weekend that price was “not the main consideration” noting that he would want to know what private equity firms would want to do with the business if they bought it.

He said on Tuesday: “It is good that we have an offer to consider. We now have to do our homework to see whether it works for clients, shareholders and staff. There is a long way to go before it becomes a reality.”

The consortium declined to comment.