The UK’s largest investment platform, Hargreaves Lansdown, agreed on Friday to a GBP 5.4B ($6.9B) acquisition by an international consortium aiming to gain a larger share of the competitive UK wealth market.
This deal is the second highest by value this year for a London-listed company and follows a series of takeovers involving British firms.
The acquisition has the support of co-founders and major shareholders Peter Hargreaves and Stephen Lansdown, who established the company in 1981 and listed it in London in 2007.
The consortium, which includes Europe’s largest private equity firm CVC Capital Partners, Abu Dhabi’s sovereign wealth fund (ADIA), and Swedish private equity firm Nordic Capital, confirmed the GBP 11.40 per share cash offer as final.
The buyers stated that a “substantial transformation” of the company is necessary, including investment in technology, to compete effectively after its growth has lagged behind some rivals.
Peel Hunt analysts noted that while the price may not seem high, it reflects the investment needed for transformation.
Shares in FTSE 100-listed Hargreaves Lansdown increased by 2 per cent to GBP 11.02 in early trading. They had risen by about 10 per cent since the takeover bid became public in May.
Co-founder Hargreaves plans to reinvest half of his 19.8 per cent stake in the private company and will receive GBP 535M, according to Reuters calculations.
The UK wealth market has become increasingly competitive, with international financial groups entering the market and UK banks, insurers, and asset managers focusing more on wealth management.
US investment firm Vanguard has been expanding its UK Personal Investor platform, and US retail trading platform Robinhood launched in Britain in March.
RBC analysts suggested that the buyers’ plans to invest in Hargreaves Lansdown’s technology platform and potential price reductions could enhance its competitive edge, though the funding for these investments remains unclear.
Investors in Hargreaves Lansdown have the option to roll over their shares into a stake in the private company rather than accepting the cash offer. However, some shareholders may be unable to hold shares in an unlisted company.
Hargreaves Lansdown, which had turned down a GBP 985 pence per share offer from the consortium in May, also reported an annual adjusted pretax profit of GBP 456M, surpassing the analysts’ average estimate of GBP428M. Net new business fell 13 per cent year-on-year to GBP 4.2B.
