Will private equity set its sights on AJ Bell, M&G or River Global after the Hargreaves Lansdown takeover?
The takeover battle for Hargreaves Lansdown seemed to have finally reached a resolution this morning, and within hours of the details being announced, analysts were already speculating as to which London-listed asset manager could be next to fall to private equity.
Ben Bathurst, analyst at RBC, said today that the planned investment by the private equity houses into Hargreaves Lansdown could enhance the firm’s competitive position and lead to “potential consequences for the D2C propositions” of AJ Bell and Abrdn’s Interactive Investor.
AJ Bell founder Andy Bell has recently been selling chunks of his stake in the business to the market, but the DIY platform’s strong share price performance makes a takeover seem unlikely. But with private equity housing sitting billions in dry power, nothing can be ruled out.
Elsewhere, Abrdn has said Interactive Investor is the crown jewel of its business, and since it is the only part of the asset manager still receiving new money, it’s probably right to do so. However, it’s unlikely management would turn down an offer at the right price, especially if competition in the market intensifies.
Away from the brokers, asset managers also look ripe for further deals.
Which company could be next after Hargreaves Lansdown
Brooks Macdonald has been the perennial candidate for takeover rumours, which have swirled for years, claiming that the mid-sized firm may be a target in a bid from a larger competitor.
These were bolstered in October after Reuters reported the company was secretly working with investment bank Raymond James to defend against a takeover bid.
In April, Numis analysts Kim Bergoe and David McCann argued that Brooks Macdonald should be considered a takeover target, after it was forced to axe 50 jobs and has seen clients persistently pull money.
Outside of Brooks, Liontrust and Jupiter Asset Management have both indicated that they are on the hunt to buy out smaller companies.
“We are very much on the lookout for opportunities to supplement our existing investment management capabilities,” Jupiter CEO Matthew Beesley told the Financial Times last month.
“I’m constantly on the lookout for new talent to join the business and whether it’s by a team lift-out or small, boutique acquisitions, we are very much open for business.”
Similarly, Liontrust seems not to have been deterred after its disastrous takeover bid for GAM last year, which ultimately saw two-thirds of shareholders vote against the deal. It was forced to deny being in talks to acquire competitor Artemis earlier this year.
However, the two are often discussed as potential takeover targets themselves by private equity or a larger rival.
Jupiter’s stock price has tumbled 77 per cent over the last five years as investors have lost confidence in the company’s outlook. Liontrust’s stock price has fallen by a similar degree since its peak in 2021.
Peel Hunt analysts said at the time that Liontrust’s failed bid for GAM left it “as either predator or target” due to the hit to its reputation and valuation.
Meanwhile, Assetco (which is set to change its name to River Global) has seemingly been constantly targeted as Hargreaves Lansdown peer, Premier Miton held secret talks last year to acquire parts of the business.
The firm already announced in June that it would spin off its stake in Parmenion after it had received several approaches to buy a stake in the platform.
M&G was also the subject of takeover rumours last year, as both Schroders and Australian bank Macquarie apparently considered an offer for the company. However, these seem to have died down, with chief exec Andrea Rossi stating the business could go it alone.
Ultimately, it seems almost everyone is in play. Hargreaves Lansdown’s buyout is unlikely to be the last.