Lancaster Funding Administration has criticised the potential £5.4bn takeover of Hargreaves Lansdown by a non-public fairness consortium.
Lancaster, which owns a comparatively small holding of 1.9m shares in Hargreaves value £21m, stated it was “unconvinced that this provide is honest for all HL shareholders.”
In an open letter to HL chair Alison Platt, the agency questioned the equity of the deal which it stated would hit small shareholders.
It criticised the worth of the provide in addition to phrases that might enable as much as 35% of the shares to roll over into a brand new personal firm.
It urged Hargreaves to take extra time to contemplate its choices and tackle board shareholder assist for various outcomes.
That was in response to the consortium growing its bid by greater than 10% following HL’s rejection of an earlier £5bn takeover bid in Might.
The consortium raised its provide from 985p per share to 1,140p per share in money.
The consortium will resolve by 19 July whether or not to make a full provide. The consortium includes CVC Advisers Restricted, Nordic Capital XI Delta, SCSP (performing by way of its normal companion Nordic Capital XI Delta GP SARL), and Platinum Ivy B 2018 RSC Restricted, a wholly-owned subsidiary of the Abu Dhabi Funding Authority.
The Lancaster letter stated: “We aren’t averse to non-public fairness gives the place there’s additionally a ‘win-win’ together with public shareholders and different stakeholders. Nevertheless, right here we discover it an unlucky irony that HL, as a champion of open entry to monetary providers, could itself now be near exiting the general public markets with out full worth provided to public shareholders in our opinion.
“We can not assist however understand this as a two-tiered provide, and in our opinion, it doesn’t appear equitable to these shareholders unable to go personal.”
The letter included the next questions for the HL board:
- What timeline do present shareholders view as acceptable for HL’s restoration to development as a listed firm?
- What quantity of present shareholders would have the ability to take up the personal “rollover fairness various” which we view as central to this provide?
- Does the money provide replicate honest worth given the factors made under on valuation and development potential?
- Will the Board assist smaller shareholders by providing a separate vote for individuals who will not be in a position to take up the personal “rollover fairness various”?
Lancaster concluded: “We additionally urge the board to offer itself extra time in its present type to evaluate HL’s strategic choices and to evaluate shareholder assist for various outcomes. If administration can execute on the technique because the board and we count on, then in our view there’s loads of development and upside potential for this personal fairness consortium or others to come back again at a really completely different value and valuation sooner or later.
“We consider that path would create a much better final result for HL’s public shareholders, HL’s shoppers, and certainly British savers.”
London-based Lancaster Funding Administration was based in 2007 by Matthew Wooden and James Roycroft.
