Yahoo Finance Hargreaves Lansdown Shares Fall After CEO Announces Departure
By Scott Kanowsky
Investing.com -- Hargreaves Lansdown PLC (LON:HRGV) has announced that chief executive officer Chris Hill will be retiring from the company next year, leaving the leadership of the U.K.'s largest investment platform in flux.
Hill will remain in the role until November 2023, the company said, with the group planning to undertake a "thorough and extensive" search for his successor.
"Chris has successfully led the company through a period of significant change. He is leaving HL as a stronger company, with a clearly defined strategy that the Board fully supports," said Hargreaves Lansdown chair Deanna Oppenheimer in a statement.
Hill has served as CEO and executive director of the funds supermarket for six years after first joining the group as chief financial officer in 2016. More recently, he laid out a five-year £175 million plan - funded principally by dividend cuts - last February that aims to refocus the business on providing an improved investment platform and a tech-based financial advisory service.
Analysts at Credit Suisse said they were "somewhat surprised" by Hill's decision.
"No specific timeframe has been given for the process to find and appoint a successor, and we expect HL to continue both internal and external candidates for the role," the Credit Suisse analysts said in a note to clients.
Shares fell by more than 6% following the announcement.
Also weighing on sentiment around the stock was its first-quarter trading update, which was released in conjunction with the unveiling of Hill's departure.
Net new business came in at £700 million, missing consensus estimates, as customer interest in Hargreaves Lansdown's savings service was partially offset by moderating flows into its investment platform.
Hill pointed to a "challenging macroeconomic and geopolitical backdrop" as a major reason behind clients choosing to shy away from making bets on stocks.
"Although flows into risk based investments remain subdued, both client and asset retention rates remain strong and in line with last year," Hill said.
Revenue during the three-month period to September 30 jumped by 15% compared to the same period last year to £162.9 million, beating expectations. An increase in net interest margin helped Hargreaves Lansdown make up for a slowdown in share dealing volumes and lower year-on-year assets under administration.
Meanwhile, the company, which currently has more than 1.7 million total active clients, faces a new multimillion-pound lawsuit over its role in promoting the failed equity income fund run by former star manager Neil Woodford.
Claims management group RGL is demanding compensation on behalf of more than 3,000 investors from both Hargreaves Lansdown and fund director Link Fund Solutions in a claim filed in the high court in London.
It marks the first time a lawsuit has been brought against Hargreaves Lansdown over the 2019 collapse of Woodford's £3.7 billion fund. The firm, as well as Link Fund Solutions, have denied allegations of wrongdoing, but neither commented on the RGL suit.
"Put together, whilst we could see a small tail of consensus upgrades come through from the new margin guidance today, we think the uncertainty caused by [...] there being no clear-cut successor for the CEO, [...] the ongoing weakness in flows, and [...] the overhang from a lawsuit that could potentially impact the dividend if it succeeds, could all weigh on the shares this morning," analysts at Deutsche Bank said in a note.
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Hargreaves Lansdown Shares Fall After CEO Announces Departure
