(Bloomberg) -- Hargreaves Lansdown Plc is set to drop out of the UK’s FTSE 100 Index, ending the investment services firm’s more than 12-year stay in the blue-chip gauge.
As things stand, Hargreaves will be relegated to the midcap FTSE 250 index when the quarterly changes are announced next week, to be replaced by private equity company Intermediate Capital Group Plc, index compiler FTSE Russell said in a statement Tuesday.
Hargreaves’ stock has fallen about 17% this year as banks and other investment providers compete for deposits and as regulators’ vow to ensure savers receive “fair” rates of interest. Its market value of about £3.4 billion ($4.3 billion) is the smallest in the FTSE 100.
UBS Group AG analyst Haley Tam gave Hargreaves a sell rating this month, citing the competitive threat posed by rival Vanguard Group’s low-cost funds, including ISAs — a key offering of Hargreaves.
ICG, meanwhile, is rebounding from a plunge last year when a surge in interest rates made dealmaking more costly and slashed asset valuations. The group reported a rise in assets under management and fee income on Nov. 15, a year after its demotion to the midcap FTSE 250 index.
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With a market value of about £4.5 billion, ICG is now comfortably inside the top 90 UK firms by that measure, making it eligible for FTSE 100 inclusion under FTSE Russell’s guidelines.
Winning back its spot in the index would provide a further boost to the shares as so-called tracker funds would have to buy them in order to replicate the performance of the gauge.
Final changes to the FTSE 100 will be announced on Nov. 29, based on Nov. 28 closing prices, meaning Hargreaves Lansdown could still survive the cut. RS Group Plc is the next smallest FTSE 100 stock with a market value of about £3.5 billion.
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