"Under private equity ownership, the platform will likely experience strategic and managerial changes, addressing the structural challenges it has faced in recent years."
- Christian Kent, managing director in Houlihan Lokey’s FinTech Group
Hargreaves Lansdown has announced that it has received a new £5.4bn takeover bid from a private equity consortium.
The consortium comprises CVC Advisers, Nordic Capital XI Delta, SCSP, and Platinum Ivy, a wholly-owned subsidiary of Abu Dhabi Investment Authority (ADIA).
The revised proposal follows three previous approaches from the consortium in recent months and is subject to a number of pre-conditions, including completion of due diligence.
Hargreaves Lansdown has confirmed that the revised offer is "at a value that the board would be willing to recommend unanimously to Hargreaves Lansdown shareholders".
The consortium must now announce a firm intention to make an offer by 19th July 2024.
Hargreaves Lansdown noted that there is no certainty that a firm offer will be made, or to the terms of the offer.
Christian Kent, managing director in Houlihan Lokey’s FinTech Group, commented: "The potential acquisition of Hargreaves Lansdown by private equity underscores the valuation disconnect for wealth managers between public and private markets. With over 25 private equity-backed wealth management firms in the UK, this move isn't surprising. Over time, we expect to see further consolidation among these firms, and with robust private equity backing, HL could emerge as a pivotal player in this consolidation through M&A activities.
"Under private equity ownership, the platform will likely experience strategic and managerial changes, addressing the structural challenges it has faced in recent years. That said, Hargreaves Lansdown possesses substantial brand value with nearly 2 million active customers and the private equity business model, with a longer-term focus and strategic expertise, could help HL drive necessary changes outside the constraints of the quarterly earnings cycle.
"One area of potential development is the integration of advisory services into HL’s business model, aligning it more closely with other private equity-backed strategies in the sector. I’m confident there will also be a focus on improving technology and automation to facilitate a more competitive pricing structure for clients."
