Abrdn has acquired Interactive Investor in a £1.5bn deal setting it on a course to become a challenger to D2C platforms Hargreaves Lansdown and AJ Bell.
II will continue to operate as a standalone business and independent brand under Abrdn’s personal vector, led by CEO Richard Wilson. Abrdn said it remains committed to II’s “subscription-based” pricing.
The deal expands Abrdn’s reach in the direct investing market which has been growing even more rapidly during the coronavirus pandemic.
II currently has over 400,000 customers and £55bn in assets under administration (AUA), with an estimated 15.5% share of the market, second only to Hargreaves, which has captured 38% of the market. In the year to 30 June 2021 it attracted £5.5bn of net flows, circa 17% of opening AUA, and saw average daily retail trades spike to 21,700, up from 8,700 the year before.
Abrdn CEO Stephen Bird (pictured) said: “This is a unique opportunity and a transformative step in delivering our growth strategy. Interactive Investor is the UK’s number one subscription-based investing platform with a powerful reputation as a consumer champion. Abrdn’s scale, resources, and shared vision will enable interactive investor to grow confidently and expand its leadership position in the UK’s attractive savings and wealth market.”
II being valued much more like a fintech firm
Lang Cat consulting director Mike Barrett tweeted that the £1.5bn for II puts the deal “very much at the top end of recent M&A activity”.
Fellow platform Nucleus, which has £20bn in assets, was sold to James Hay for £145m earlier this year, while Abdrn jettisoned its own adviser platform Parmenion for a mere £102m in March.
“It’s being valued much more like a fintech than a utility, which you can argue platforms are,” Chelsea Financial Services managing director Darius McDermott said. “It’s not like you can’t get disrupted in our marketplace, so it does look a very rich valuation.”
Last year II posted £45.5m in pre-tax profits and revenues of £133.2m.
II said it will remain a “consumer-driven, digital, open architecture investment platform” that continues to offer its “transparent and innovative subscription service with fair flat fees for customers”.
It will also continue to advocate on behalf of retail investors, including lobbying for enhanced retail access to IPOs.
“This is an exciting new chapter in our history and means that we can focus exclusively on serving those who matter most: our customers,” Wilson said.
The acquisition is expected complete in the second quarter of 2022.
See also: Fixed fees in the spotlight as Abrdn seeks to scupper II listing in £1.5bn bid
