Investment firm slams £5.4bn Hargreaves Lansdown bid

An investment firm has publicly expressed its dismay at the likely £5.4bn takeover of Hargreaves Lansdown.

Lancaster Investment Management, which has a £21m stake in the Bristol business, has described the private equity bid as a two-tiered offer.

The board of the Bristol company is recommending that the bid from a private equity consortium is approved by shareholders.

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 includes Nordic Capital and Platinum Ivy – a subsidiary of Abu Dhabi’s sovereign wealth fund.

Three previous bids from the consortium have been rejected including one which valued the business at £4.6bn.

And both founders of the Bristol business – Peter Hargreaves and Stephen Lansdown – have given their backing to the deal.

Lancaster Investment Management has written an open letter to Hargreaves Lansdown chair Alison Platt to voice its concerns.

The letter claimed the structure of the deal meant it was not fair to all investors and it has also raised doubts about the price.

The letter, which was signed by portfolio manager James Hanbury and investment analyst James Spalton, criticised the value of the offer as well as the terms that would allow up to 35 per cent of the shares to roll over into the new private company.

The letter said: “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, 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.”

“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.”