Hargreaves sacks himself
THE billionaire businessman who built FTSE 100 savings firm Hargreaves Lansdown from his spare bedroom stunned the City yesterday by announcing he was quitting the board with immediate effect.
Catching investors by surprise, Peter Hargreaves said he was stepping down as a director to spend more time with his family and pursue other interests, after setting up the pensions and investments giant in Bristol with friend Stephen Lansdown more than 30 years ago.
After falling 4pc initially, shares ended the day down 2.2pc, or 27p lower at 1210p – with analysts describing the slide as a ‘mark of respect’ from investors.
Hargreaves, who will still work part-time at the firm, admitted the statement was a ‘bit abrupt’ but insisted it ‘was no big deal’.
Scoffing at suggestions of a clash of egos with chief executive Ian Gorham due to his continued prominence at the company, he said: ‘This decision had been on my mind for a while. There are parts of the business I love, and board meetings are not one of them.
‘All they’re doing is taking away all my titles and I’ve never been a great lover of titles.’
The 68 year old said he and Lansdown had started talking about succession plans a decade ago and had gradually installed a new management team.
This i ncluded Gorham who replaced Hargreaves as chief executive in September 2010.
Referring to the new management team, he said: ‘ They’re younger than me, they’re more hungry than me and they have more energy than me - and they run the business extremely well. But I think the world needs to know that these are the guys doing it and I’m not doing it any more.’
In a swipe at older bosses who cannot let go of their business empires, Hargreaves said: ‘I’m a bit unique really. Quite often people who build big businesses don’t believe anyone else can run them, and you end up with an old rascal in their 70s and no one to take them on. I could name several – and I won’t – who put themselves in that invidious position.’ Hargreaves, a passionate gardener, said he had no intention of selling some of his 32pc stake in the busi- ness, which generated a £48m dividend last year. Responding to yesterday’s dip in the share price, Robin Savage from Canaccord Genuity said: ‘He is a remarkable individual, and while I don’t think his departure will impact the running of the company and its profit outlook, the share reaction is a little mark of respect for the legacy he has created.’
From a standing start in 1981, Hargreaves Lansdown now has 667,000 clients, more than £49bn of assets under management and 904 staff.
It has made Peter Hargreaves the 39th richest man in the UK, with an estimated fortune of £2.4bn.
But the breakneck speed of expansion at the firm has slowed more recently as it has been forced to adapt to changes to regulations on charges – designed to make them more transparent for customers. Hargreaves made huge amounts of money from commissions from investment companies when it sold products to clients. This practice has been banned across the i ndustry so i t now charges fees directly to customers.
Profit before tax totalled £101.9m in the second half of last year, down from £104.1m in the same period in 2013.