Hargreaves Lansdown takeover: what does it mean for your money?

The board of British investing giant Hargreaves Lansdown has agreed to a takeover bid for the company, at £11.40 per share.

With over 1.8 million customers and 40.7% market share of direct to consumer investment platforms, the Bristol-based platform is a huge name but has seen its share price continuously drop in recent years.

The formal offer, from a private equity consortium made up of a range of firms including CVC Capital, Nordic Capital, and a subsidiary of the Abu Dhabi Investment Authority, was made to the board of Hargreaves Lansdown. 

The offer puts the total value of the business at £5.4 billion, and will take it out of the London Stock Exchange. The board at Hargreaves Lansdown rejected three previous bids before recommending to shareholders to accept this offer.

Here, Which? digs into the deal, and finds out what it might mean for you.

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Why is Hargreaves Lansdown being sold?

The platform has struggled to keep up with the new developments and pricing of its competitors. In our comparison of fees and charges, Hargreaves Lansdown consistently comes out as one of the most expensive.

It also champions increasingly unpopular active funds which leaves it missing out on investors looking primarily for tracker funds, though in recent months it launched its first passive fund portfolios.

Its reputation with consumers was shaken by the Woodford scandal, when Hargreaves Lansdown continued to recommend the Woodford Equity Income Fund on its Wealth 50 list until the day the fund closed down in 2019.

But, for all of its troubles, Hargreaves Lansdown has by far the largest number of customers of any investment platform. And according to our January 2024 survey, those customers are impressed with what it has to offer - fees notwithstanding.

It had dropped out of the FTSE 100 earlier this year, though it re-joined the index as its share price climbed after the bid was announced.

So while its share price has dropped from highs of over £22 in 2019 to lows of under £7 in 2024, it's still a compelling investment in the private equity sector who see the value in the amount of customer assets held on the platform.

• Find out more: best investment platforms in the UK 2024 

What will happen to Hargreaves Lansdown customers?

New owners can spell change for any establishment - whether it's your local pub or the biggest retail investment platform in the country.

Acquisitions are common in the investment platform space - Interactive Investor has recently bought out platforms like The Share Centre, before being acquired themselves by Abrdn in 2021.

Other platforms like Charles Stanley Direct and Bestinvest have gone through management changes in the last few years.

These platforms have all undergone some kind of change since being bought out - whether that's changes to fees, or rebranding the website.

But, plenty of platforms whose ownership has stayed the same have implemented pricing or functional changes, so it's not a simple cause and effect.

So far, the consortium behind the offer has given no details on how they want to run things.

• Find out more: best stocks and shares Isas 2024 

What will happen to investments in Hargreaves Lansdown?

Once it goes private, you will no longer be able to buy shares in Hargreaves Lansdown.

If you are currently invested directly in shares of Hargreaves Lansdown, you’ll likely see your shares turned automatically into cash when the takeover is complete.

The offer price of 1140p per share will be translated into whatever stake you have. Investors with large enough stakes can convert their shares into private equity.

Though, investors in Hargreaves Lansdown with Hargreaves Lansdown, will likely be able to own ‘stub equity’ of the platform, which is a form of investing in private companies.  

But, investments in private un-listed companies are a lot riskier than investing in public shares, and cannot be held in an Isa.

• Find out more: how to buy shares 

What happens to funds invested in Hargreaves Lansdown?

Several popular Lindsell Train funds and investment trusts - like the WS Lindsell Train UK Equity fund which manages £3.3 billion - have backed Hargreaves Lansdown, meaning the fund manager is the second largest shareholder in the company with a 13% stake, behind only co-founder Peter Hargreaves.

Nick Train, who manages the funds, will vote on the offer on behalf of investors in the fund, and rebalance the cash made from the deal into other investments if he does accept.

Other asset managers like BlackRock, Baillie Gifford and Vanguard own 2-6% each and will similarly vote in the interest of their fund investors.

Investors in tracker funds following the FTSE 100 will also have small portions of their money invested in Hargreaves Lansdown. 

The managers of the funds will be able to re-allocate the money invested elsewhere without you having to do anything about it.

• Find out more: investment funds explained