Hargreaves Lansdown agrees £5.4bn takeover by private equity consortium

Hargreaves Lansdown has finally accepted a £5.4bn takeover proposal from a private equity-backed consortium.

The online investment platform has agreed to be acquired by a group comprising CVC Capital Partners, Nordic Capital and Platinum Ivy, a subsidiary of sovereign wealth fund Abu Dhabi Investment Authority.

Hargreaves shareholders will receive £11.40 in cash for each share they hold, along with a dividend of 30p per share.

The offer represents a 54.1 per cent premium to Hargreaves’ share price on April 11, the last day before the consortium first approached the FTSE 100 company’s board.

Hargreaves unanimously rejected an initial £4.7bn proposal in May, saying it “substantially” undervalued the company and its future prospects, before the consortium increased its offer by £700m.

Alison Platt, chair of Hargreaves, told investors the new deal “represents an attractive opportunity” for them to “obtain immediate and secure cash value for their investment at a level that may not be achieved until the strategy is executed.”

Completion of the acquisition is expected in the first quarter of 2025, subject to shareholder approval.

Hargreaves Lansdown shares rose 2.3 percent to 1,102 pence on Friday morning after the announcement, meaning they are up around 55 percent since the start of the year.

Since it was founded by Peter Hargreaves and Stephen Lansdown in 1981, the company has grown to become the UK’s largest direct-to-consumer investment platform.

In June, the bank had 1.9 million clients and £155.3bn of assets under management.

The company enjoyed strong growth during the lockdown era, when many young Britons tried their hand at retail investing for the first time to earn some extra cash.

However, it began to experience a significant slowdown in trading as Covid-related restrictions were relaxed and the Bank of England raised interest rates in response to rising inflation.

This, combined with concerns about rising costs and spending on technology, has caused its share price to fall and led to the company briefly spending time on the FTSE 250 index.

A potential takeover by Hargreaves would mark another blow to London markets, which have seen several major companies sold to overseas buyers in recent years.

In 2024 alone, Robinsons squash maker Britvic, cybersecurity specialist Darktrace, music rights investor Hipgnosis Songs Fund and video game services company Keywords Studios have all agreed multi-billion-pound acquisition deals.

Hargreaves also published its annual results on Friday, which showed its pre-tax profits fell 4 percent to £396.3 million in the year ended June.