Hargreaves Lansdown has agreed a £5.4 billion takeover by a group of private equity investors.
Following months of talks, the consortium led by CVC Capital Partners had their final offer agreed by the Hargreaves Lansdown board on Friday. The £11.40-a-share offer has been recommended to shareholders, who will be able to vote on the deal. The takeover is still subject to final shareholder and regulatory approval, but it is widely expected to be approved. As a result, the FTSE 100 company will leave the London stock market. The buyers are CVC, Sweden’s Nordic Capital, and a subsidiary of the Abu Dhabi Investment Authority.
Hargreaves Lansdown is the UK’s largest investment platform, with 1.8 million customers. In recent years, it has launched a savings marketplace called Active Savings and cut the fees on lifetime ISAs and junior ISAs. Earlier this year it gave retail investors access to primary gilt markets.
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We look at what the takeover means for you, whether you’re a shareholder or a customer.
I’m a shareholder – how does it affect me?
Hargreaves Lansdown was founded in 1981 by Peter Hargreaves and Stephen Lansdown. They own 26% of the shares between them.
The offer values the company at £11.40 per share and is more than 15% higher than the £9.85 per share offer made in April, which was dismissed by the Hargreaves Lansdown board as significantly undervaluing the company.
The takeover will result in a bumper payday for the billionaire founders, netting them hundreds of millions of pounds. For ordinary shareholders, the first thing to do is look out for details about the offer and vote being sent next month. There must be a 75% majority for the deal to get the final go-ahead.
If approved, shareholders will be able to transfer their stake to the new unlisted company or accept cash in exchange for their shares. Those wanting to sell their holding will get £11.10 per share in cash, plus a dividend of 30p per share, taking the total to £11.40. Shareholders who wish to retain their stake will be subject to an overall cap of 35% ownership.
It is expected that most shareholders will opt to take the cash, rather than have a holding in an unlisted company. The announcement on Friday confirmed that Hargreaves would take only 50% of his shares into the new venture, while Lansdown will sell all of his shares.
Should I sell or keep my shares?
Hargreaves Lansdown shares are easily traded at the moment because they are listed on the UK stock market. When the company goes into private hands, which is likely to happen in early 2025, you will no longer be able to sell and buy them in the same way.
Holding unlisted shares can be tricky to manage and hard to sell. If you want to offload shares you will have to find a buyer or wait until the new owners decide to sell or list the company on a stock exchange again.
Unlisted companies operate without the same reporting requirements as those on a stock market, which can make it difficult to get an accurate picture of their operations and performance. It can be difficult to value unlisted firms, and so you may not know how much your holding is worth.
We have lots more information on this topic in our article on what happens when a company delists from a stock exchange?
I’m a customer – how will it affect me?
There is unlikely to be any changes to the investment platform either now or in the early stages following the takeover.
Hargreaves Lansdown says: “It’s important to understand that the offer doesn’t have any impact on how your assets are held or managed and there is no change to the security of your assets.
“Nor are we planning any changes to any of our products, services, or to your investments and cash on our platform.”
You should be able to continue to access your account (whether it’s in an ISA, savings account, pension or fund and share account), and trade investments, regardless of who owns the business.
The consortium says it has no intention of changing the location of the investment firm’s Bristol headquarters, which is where most of its 2,400 staff work. The private equity buyers praised Hargreaves Lansdown for its strong, trusted brand and its important purpose of helping people manage their financial wealth and enabling clients to get the right outcomes. However, it also said the company requires substantial investment in an “extensive technology-led transformation”, in order to drive the next phase of growth and development. So, in time, the investment platform could look different in terms of its technology infrastructure and digital channels.
Is my money at risk?
Hargreaves Lansdown will continue to be regulated by the Financial Conduct Authority (FCA).
The investment platform states: “The entity which holds client assets (HL Nominee) is segregated from the business and the liabilities of the business.
“All client money is held by us on trust and is segregated from our own funds in accordance with the FCA’s client money rules and guidance.”
The FCA regulation means customers will still be able to take any complaints to the Financial Ombudsman Service. You will also continue to have protection under the Financial Services Compensation Scheme (FSCS), which covers up to £85,000 held in any firm that fails.