Hargreaves Lansdown, the UK financial adviser, has opted for an IPO after in January appointing Lexicon Partners, a boutique investment bank, to explore options for the group.
Despite the market turbulence in February, which put a damper on others’ flotation plans, including a number of Russian companies looking to list in London, Hargreaves is thought now to be targeting a valuation of between £650m and £700m, more than initially reported.
The provider of Sipps, Isas and wraps reported a 35 per cent in increase in turnover to £43.3m in the six months to December 2006, and a 58 per cent jump in underlying operating profit to £17.2m – taking margins to 40 per cent, from 34 per cent, in the previous half-year.
The offer, slated for mid-May, will see the sale of 25 per cent of the business by its existing shareholders – the founders, as well as certain current and former employees and “connected persons.” The directors and senior management have agreed to hold onto their shares for up to four years after the float, with each allowed to cash in a quarter of their post-IPO holding at the company’s annual results from 2008 to 2011.
Founded by chief executive Peter Hargreaves and chairman Stephen Lansdown, who each control about 40 per cent of the business, the group has strengthened its board in preparation for the float, appointing Jonathan Bloomer, former chief executive of Prudential who is also a partner at Cerberus, and Mike Evans, a former senior executive at Skandia, as non-executive directors.
It is not known how much of their stake the founders will sell, but a £700m float would value their holdings at £280m a piece.
Citigroup is sponsor, global coordinator and bookrunner on the IPO, while Numis is acting as co-lead manager.