IPO values Hargreaves Lansdown at £711m

Hargreaves Lansdown, the UK-based financial adviser and broker, is set to raise some £178m when it lists on the London Stock Exchange later this month, considerably more than originally expected.

The price range for the offering fore the Bristol-based company was set on Tuesday at 140p to 160p for the 25 per cent of the company that is to be offered. At the midpoint of the range, that values the company at some £711m.

Even at the bottom end of the range, the valuation would put Hargreaves Lansdown into the FTSE 250.

Arriving at a range was complicated by lack of an obvious peer group so the performance of selected stockbrokers and fund managers has been taken into account. The valuation gives price earnings ratio of around 14 on assumed earnings of some £50m in the year to June 2009.

When the flotation plan was first announced in April, a total share value of some £650m was envisaged. That would have netted the founding partners – Peter Hargreaves, chief executive, and Stephen Lansdown, chairman – some £260m each as they own 80 per cent of the company between them. The higher valuation announced on Tuesday would value their holdings at more than £284m each.

Both Mr Hargreaves and Mr Lansdown have said they intend to remain significant shareholders.

In addition to institutional investors, some clients and employees of the company are to be offered shares.

Hargreaves Lansdown is expected to begin conditional trading on the London Stock Exchange on May 15.

Citigroup will be bookrunner for the flotation with Numis as co-lead manager and Lexicon as financial adviser.

Founder in 1981, Hargreave Lansdown has achieved annual revenue growth of 20 per cent over the last decade. In the six months to the end of December, revenues grew 35 per cent to £43.3m. It has £8.3bn of assets under management, mostly through its wrap platform, Vantage.