Hargreaves Lansdown, the UK’s largest DIY investment platform, has agreed to a £5.4 billion takeover by a consortium of private equity firms, including CVC Capital Partners, Nordic Capital, and Abu Dhabi Investment Authority.
The deal, which values each share at £11.40 in cash, will see the company delisted from the London Stock Exchange, marking another major UK business snapped up by private equity as the market remains undervalued.
Founded in 1981 by Peter Hargreaves and Stephen Lansdown, the company built a reputation for selling direct-to-customer financial products, like individual pensions.
Now, as part of this deal, shareholders are offered an alternative option to roll over their stakes into the newly unlisted entity.
However, this option has sparked criticism, particularly from investors who are restricted from holding shares in private companies.
Peter Hargreaves, who owns nearly 20% of the company, supports the takeover, agreeing to sell half of his stake while keeping the rest with the new owners. In contrast, Stephen Lansdown has decided to sell his entire near-6% holding.
Alison Platt, Chair of Hargreaves Lansdown, emphasized the strategic value of the offer, noting it presents an attractive opportunity that might not be realized until the company’s long-term plans come to fruition.
Despite past challenges, including a drop in share price from a 2019 peak of £24 due to criticism of a costly technology overhaul, current leadership under CEO Dan Olley has refocused efforts on tech improvements.
Shares of Hargreaves Lansdown rose 1.8% to £10.97 following the announcement. While analysts at Jefferies acknowledge the premium price, they see long-term value in the company, expecting shareholders to back the deal.
Nordic Capital, part of the consortium, has a track record in the digital investment space, having taken Nordnet private in 2016 before relisting it in 2020.
The experience and strategy from such ventures are likely to shape the future of Hargreaves Lansdown under its new ownership.
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