Founders expect £850m payout as Hargreaves Lansdown goes private following £5.4bn takeover deal

City is bracing for a new wave of takeovers after Hargreaves Lansdown agreed to go private in a £5.4bn deal.

The investment platform is just the latest London-listed company to be acquired by private equity after a flurry of bids this year.

Analysts have warned that the stock market is a prime target for buyout firms looking for “cheap prey” as central banks begin to cut interest rates.

Meanwhile, research showed that private equity giants hold more than half a trillion dollars and are ready to invest.

Directors of Hargreaves Lansdown have accepted an offer of £11.40 per share from a consortium of investors including CVC and the Abu Dhabi sovereign wealth fund.

The offer represents a 54 per cent premium to its closing price of £7.40p on April 11, the day before the consortium initially approached Hargreaves, but still significantly lower than the £20 the shares were worth in 2019.

Takeover talks between the company and the private equity group, which also includes Nordic Capital, have dragged on for months after the firm rejected an initial deal of 9.85 pounds a share. Founders Peter Hargreaves, 77, and Stephen Lansdown, 71, plan to vote in favour of the offer, which will earn them 850 million pounds between them.

Hargreaves will retain a 10 per cent stake in the company, while Lansdown plans to sell its entire 6 per cent stake. But it is a further blow to the City as the deal comes just a month after Britvic accepted a £3.3bn bid from brewing giant Carlsberg.

This followed cybersecurity group Darktrace’s decision to back a £4.6bn takeover by US private equity firm Thoma Bravo.

The London stock market crisis is expected to deepen as falling interest rates mean private equity firms can borrow cheap money to fund deals. Last week, the Bank of England cut the base rate by 0.25 percent and the U.S. Federal Reserve is expected to follow suit when policymakers meet next month.

A cut in borrowing costs could kick-start another wave of takeover bids, analysts said.

Hargreaves Lansdown is facing legal action from clients who lost their money after investing in disgraced stockpicker Neil Woodford’s funds through the platform.

The firm continued to recommend Woodford’s fund to its clients until it collapsed in 2019, despite concerns about its liquidity.