In a significant development for the UK fintech sector, IG Group Holdings plc has announced the acquisition of Freetrade, the commission-free investment platform, for £160 million. This strategic move represents a major consolidation in the UK's retail investment landscape.
The Deal at a Glance
Freetrade, one of the UK's fastest-growing investment platforms, will be acquired entirely by IG Group in a cash deal. The acquisition is expected to complete in mid-2025, subject to regulatory approvals. This represents an interesting valuation journey for Freetrade, which was previously valued at £650m in 2021 and later at £225m.
Freetrade's Strong Performance
The platform has shown impressive growth metrics:
- 720,000 customers
- £2.5 billion in Assets Under Administration (AUA)
- £27.5 million in revenue for 2024 (32% year-on-year growth)
- First-time positive EBITDA achievement
- 41,000 customers with AUA of £10,000 or more
Strategic Benefits for IG Group
The acquisition appears strategically sound for IG Group for several reasons:
- Access to new customer segments in the UK direct investing market
- Addition of a strong brand in the self-directed investment space
- Acquisition of proprietary, scalable technology
- Entry into the commission-free trading market
Good News for Crowdfunding Investors
Freetrade, known for its successful crowdfunding campaigns, has delivered solid returns to early investors:
- Round one investors achieved a 15x return
- Pre-Series A investors averaged 2.7x returns
- Pre-Series B investors averaged 1.7x returns
Future Plans
IG Group has committed to:
- Operating Freetrade as a standalone business
- Retaining the existing management team, including CEO Viktor Nebehaj
- Investing in product expansion and new features
- Increasing marketing efforts to accelerate growth
Market Context
The UK direct investing market has shown strong growth, with a 10% compound annual growth rate. This trend is expected to continue, driven by increasing self-directed investing, greater individual responsibility for retirement planning, and growing financial literacy.
This acquisition marks another chapter in the consolidation of the UK fintech sector, showing how successful startups can create significant value while maintaining their innovative edge under larger corporate ownership.
The deal appears to be a win-win: IG Group gains a strong position in the retail investment space, while Freetrade secures the backing needed to accelerate its growth plans. For customers, the continuation of the platform under its current management team suggests the service they know and trust will remain intact, now with the additional security of IG Group's financial strength behind it.