U.K. financial services firm Hargreaves Lansdown has accepted an offer for a £5.4 billion ($7 billion) cash purchase by newly formed private equity consortium Harp Bidco that includes a sovereign wealth fund, according to a news release.
The consortium is a newly formed company indirectly owned by the private equity firms CVC Private Equity Funds, Nordic Capital and Platinum Ivy, which itself is a subsidiary of UAE sovereign wealth fund the Abu Dhabi Investment Authority. If the offer is successful, Hargreaves Lansdown will be removed from its listing on the London Stock Exchange.
Hargreaves Lansdown is the largest retail investment platform in the U.K. and also provides financial advisory and wealth management services. The firm is estimated to employ more than 2,000 people.
The buyout from Harp Bidco comes amid a renewed wave of private equity activity worldwide, benefiting from an improved macro, inflation and rates backdrop. Examples include KKR announcing a deal for education technology company Instructure Holdings, Apollo Global Management planning to acquire Travel Corp, Blackstone striking a deal with Goldman Sachs Alternatives to take L’Occitane International private, and Carlyle Group buying the operator of KFC fried chicken restaurants in Japan.
According to the release, Bidco views HL as being “expected to benefit from numerous tailwinds over the coming decade,” including increased individual responsibility for savings, pension reforms and an aging population.
Since HL's shares were first admitted to the London Stock Exchange in May 2007, HL's assets under advisement has grown from £10.2 billion as of June 30, 2007, to £155.3 billion as of June 30.
However, the level of gross new inflows HL has been able to attract has dropped by 35% since FY 2021. Net new business reduced from £8.7 billion in FY 2021 to £4.2 billion in FY 2024, reflecting declining client and asset retention rates.
According to the release, HL needs to “significantly evolve its marketing capability and approach to achieve new target client acquisition at lower cost.”
Bidco stated it intends to make further investments in HL's technology platform, with the intention of improving operational resilience, enhancing capacity in systems and delivering scalability.
Bidco also stated that HL will be able to more effectively deliver the growth potential of its transformation plan as a private company without the requirements of a public company.
The board of Hargreaves Lansdown recommends the deal, and the firm’s two founders have committed to vote in favor, meaning 25.5% of the outstanding shares support the offer. A report from asset managers Jeffries also anticipated that wider HL shareholders will vote in favor of the offer.
The Bidco consortium was advised by FGS Global.
