IG Group Acquires UK’s Freetrade for £160M, Marking Major Consolidation in Retail Trading Space

In a significant development in the retail trading sector, UK-based Freetrade has been acquired by IG Group for £160 million, representing a 29% discount from its previous valuation. The deal, announced on Thursday, marks a pivotal moment in the consolidation of wealth technology firms and sets the stage for intensified competition in the British retail investment landscape.

The acquisition comes at a strategic time as Freetrade has demonstrated strong growth momentum, managing £2.5 billion in assets under administration (AUA) and serving 720,000 customers by the end of 2024. The platform has shown remarkable progress in attracting higher-value customers, with those holding AUA of £10,000 or more increasing to 41,000 by December 2024.

Under the terms of the agreement, Freetrade will maintain its operational independence, continuing to operate as a standalone business with its existing brand and management team. Viktor Nebehaj, CEO and co-founder of Freetrade, will remain at the helm along with the current leadership team to ensure continuity and drive future growth.

The deal represents a significant milestone in Freetrade’s journey, which began in 2016. The company has successfully navigated through various market cycles, including the retail trading boom during the pandemic and subsequent challenges posed by deteriorating economic conditions. Despite facing headwinds, Freetrade achieved a notable breakthrough in 2024 by reporting its first profitable half-year, with adjusted earnings reaching £91,000 and revenues climbing 34% year-over-year to £13.1 million.

IG Group’s CEO, Breon Corcoran, emphasized the strategic value of the acquisition, stating that it presents a rare opportunity to strengthen IG’s UK trading and investments offering while expanding their target market. The transaction, which is expected to close in mid-2025 subject to regulatory approvals, will be funded through IG’s existing capital resources.

The acquisition comes amid increasing competition in the UK retail investment sector, particularly following US-based Robinhood’s entry into the market in November 2023. The sector has seen significant activity in recent months, including Freetrade’s own acquisition of Stake’s UK operations in October 2024, which demonstrated the company’s commitment to consolidating its position in the domestic market.

This latest development follows a period of valuation adjustments in the fintech sector, with Freetrade having previously experienced a 65% drop in valuation to £225 million during a crowdfunding round in 2023. However, the company has shown resilience and adaptation to changing market conditions, successfully growing its asset base from £1.2 billion at the end of 2022.

The transaction is expected to achieve returns exceeding IG Group’s weighted average cost of capital within three to five years, highlighting the strategic value potential of the acquisition. IG Group, which reported surplus regulatory capital of £638 million as of May 2024, plans to extend its existing share buyback programme of £150 million in the second half of the current financial year.