Hargreaves Lansdown has finally received an official bid from potential private equity buyers that management is prepared to recommend to shareholders.
The £11.10 share bid, along with a dividend of 30 pence for the end of the financial year, came after months of negotiations between the DIY platform business and the consortium of private equity companies, which includes CVC Capital Partners.
Hargreaves Lansdown previously said it would recommend an offer of around £5.4bn after it spurned lesser offers.
The group’s share price has jumped more than 50 per cent since it emerged private equity was interested in taking over earlier this year.
Hargreaves Lansdown also reported its full-year results today. The figures showed total revenue for the group had climbed four per cent to £764.9m while underlying costs rose eight per cent to £338.5m.
This left underlying profit before tax up four per cent to £456m, while total assets under administration rose to £155.3bn, a 16 per cent jump.
The group currently has 1,882,000 active clients, it added.
However, net new business came in at £4.2bn, less than half where it had been in 2021 and a 13 per cent drop from last year, while client and asset retention rates had fallen to 91.4 per cent and 88.5 per cent, respectively.
“Investment is required in both the digital experience and the overall client value proposition, including revenue investment, to address this declining retention,” the group said.
On Monday, Hargreaves Lansdown pushed back the deadline for the potential takeover bid for a third time.
Other bidders in the private equity consortium include Copenhagen’s Nordic Capital and Abu Dhabi Investment Authority-owned Platinum Ivy.
The 30p dividend will be paid to investors by the end of November 2024, the group said.
Alison Platt, chair of Hargreaves Lansdown, said that while the company had been “pleased with the progress made by the new management team”, the cash offer represented “an attractive opportunity” for shareholders.
“We are pleased to see that the consortium is aligned that Hargreaves Lansdown has an important purpose making it easy for the UK consumer to save and invest for a better future,” she said.
Pev Hooper, managing partner at CVC Private Equity Group, Emil Anderson, partner at Nordic Capital Advisors and Hamad Shahwan Aldhaheri, executive director of the Private Equities Department at ADIA, commended the company in their offer.
“Over the 40 years since it was founded, Hargreaves Lansdown has built a strong, trusted brand, underpinned by high levels of customer loyalty and advocacy,” they said.
“As a consortium, we are aligned with management that, despite these strengths, the company now requires substantial investment in an extensive technology-led transformation to improve HL’s proposition and resilience, and to drive the next phase of HL’s growth and development.”
“The consortium brings extensive experience in supporting businesses undergoing transformation, and its members have long records of investing in regulated financial services companies to build better businesses and create better customer experiences.”
“We look forward to partnering with Hargreaves Lansdown’s management to accelerate its transformation plan – including investment in technology infrastructure, digital channels, and service enhancement – all with client value, service, speed of innovation, and HL’s clear purpose at the core.”