Yahoo Finance Hargreaves Lansdown takeover bid not fair to all investors, chairman warned
A shareholder in Hargreaves Lansdown has expressed its “dismay” at a £5.4bn private equity takeover bid for the fund supermarket in an open letter to chairman Alison Platt.
Lancaster Investment Management said it was “unconvinced” by the offer tabled by a consortium of private equity funds led by CVC Capital Partners and Abu Dhabi. Lancaster said it did not think the structure of the deal was fair to all investors and also raised doubts about the price.
Concerns about the impact of the deal on the London Stock Exchange were also raised, with Lancaster describing it as the “latest in a stream of de-equitisation events in the UK market which cause us dismay”.
In the letter, it wrote: “We are not averse to private equity offers where there is also a ‘win-win’ along with public shareholders and other stakeholders.
“However, here we find it an unfortunate irony that HL [Hargreaves Lansdown], as a champion of open access to financial services, may itself now be close to exiting the public markets without full value offered to public shareholders in our opinion.”
The letter, which was signed by portfolio manager James Hanbury and investment analyst James Spalton, took aim at the value of the offer as well as unusual terms that would allow up to 35pc of shares to roll over into the new private company.
The shareholder warned that many investors would not be able to participate in this scheme as a result of restrictions on private investment.
“We cannot help but perceive this as a two-tiered offer, and in our opinion, it does not seem equitable to those shareholders unable to go private,” Lancaster said.
The British money manager holds a relatively small stake in Hargreaves Lansdown, worth a little over £21m. However, the public criticism of the deal comes amid reports of private disquiet among some investors. Shareholders have reportedly demanded a meeting with Ms Platt to discuss their concerns about the offer.
The board of Hargreaves Lansdown last week said it was ready to unanimously recommend an improved £11.40 per share bid from the consortium, which also consists of Nordic Capital and Platinum Ivy, a subsidiary of Abu Dhabi’s sovereign wealth fund.
The bidders now have until July 19 to make a firm offer or walk away.
Lancaster urged Hargreaves Lansdown’s board to take more time to explore different strategic options and to assess investor support.
It wrote: “If management can execute on strategy as the board and we expect, then in our view there is plenty of growth and upside potential for this private equity consortium or others to come back at a very different price and valuation in the future.
“We believe that path would create a far better outcome for HL’s public shareholders, HL’s clients, and indeed British savers.”
A spokesman for Hargreaves Lansdown said: “The board always maintains a close dialogue with its shareholders including with respect to the possible offer by the consortium.”
