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Hargreaves makes sparkling debut

LONDON (Reuters) - Shares in investment services and advisory group Hargreaves Lansdown HL.L rose as much as 34 percent in its London debut on Tuesday after the company priced its initial public offering IPO.L at the top of its indicated range.

Investment manager Hargreaves Lansdown confirmed on Tuesday it had priced its initial public offering at 160 pence per share, the top end of its indicative range of 140 to 160 pence per share. REUTERS/file photo

Hargreaves sold 118.6 million existing shares or about 25 percent of the total, at 160 pence per share, in a total offer size of 190 million pounds which it said was “heavily oversubscribed.”

The company had set an indicative range of 140 to 160 pence. The final pricing gave the company a market capitalisation of about 759 million pounds.

“This was bound to experience very strong demand given that this is a well respected company with a very small float,” said Saurabh Mukherjea, an analyst at Clear Capital, an independent equity research firm, adding he expected the price to stay firm.

Shares in Hargreaves Lansdown were at 206 pence in afternoon trade, below the day’s high of 214.75, but still up 29 percent from its IPO price.

Founded in 1981 by Peter Hargreaves and Stephen Lansdown, the Bristol-based company manages 8.3 billion pounds of assets on behalf of private investors, with the investments predominantly in equities.

Both the founders will together still own about 60 percent of the company, down from 80 percent. Both founders are expected to earn about 75 million pounds each from the IPO.

Mukherjea estimated that the IPO valued Hargreaves Lansdown at about 25 times calendar 2007 earnings per share, a 25 to 30 percent premium over its closest peers such as Aberdeen Asset Management ADN.L and wealth manager Rathbones RAT.L.

The IPO comes at a bullish time for global equity markets, with FTSE 100 index .FTSE up more than 5 percent so far this year amid a boom in mergers and acquisitions.

“There was a lot of pent-up demand and the issue was heavily oversubscribed,” Chief Executive Officer Peter Hargreaves told Reuters in an interview, but declined to give further details.

Hargreaves said the London listing was mainly aimed at diversifying the ownership of the company and no changes were planned at top management level for at least five years.

The company reported a 46 percent rise in turnover to 73.5 million pounds in the year to June 30, 2006 and a 85 percent jump in underlying group operating profit to 24.3 million pounds.

Sources familiar with the situation told Reuters on Monday the investment manager was set to price its IPO at the top end of its indicative range.