Online trading platform IG Group has acquired share dealing company Freetrade for £160million.
The London-based FTSE 250 constituent said the purchase, which is set to be completed by mid-2025, will help to boost its UK trading and investing offering, as well as opening up new customer segments and capabilities.
Launched in 2018, Freetrade has 720,000 customers in the UK and £2.5billion under administration as of the end of 2024. Its net inflows in 2024 are equivalent to 22 per cent of its starting assets under administration.
In September the company delivered its first ever profitable half-year since its inception.
Freetrade saw an operating profit of £91,000, swinging from a previous adjusted loss of £5.6million in the first half of its 2023 financial year.
Freetrade also pulled out of the Swedish market in August in order to turn its focus solely to the UK market.
Even so, the platform’s revenue grew by 32 per cent in 2024, reaching £27.5million, with a record revenue figure reached in the fourth quarter of the financial year.
Acquisition: IG Group says its Freetrade purchase will offer a return on the £160million it is spending to acquire the platform
Breon Corcoran, chief executive of IG, said: ‘This is a rare opportunity to strengthen IG’s UK trading and investments offering and broaden our target addressable market.
‘Freetrade is one of the most successful emerging players in the UK direct-to-customer investment market, with a strong brand, highly scalable technology and delivering rapid growth.’
IG will maintain Freetrade as a standalone entity and brand, with the firm’s chief executive and co-founder, Viktor Nebehaj, remaining at the helm alongside its current leadership team, who will continue with efforts to keep growing the company.
Nebehaj said: ‘This is an exciting opportunity to accelerate our growth and delivery of new products and features on our award-winning platform.
‘IG’s vision for Freetrade is closely aligned with our own and its backing will be of huge benefit as we continue to scale the business.’
Following the purchase IG will further expand Freetrade’s product range, as well as adding new features and increasing market activity.
It said the majority of Freetrade’s expected profit will be reinvested in order to grow the business over the coming two years.
Freetrade currently offers more than 6,000 stocks and ETFs, fractional shares, UK treasury bills, Isas, Sipps and proxy voting.
IG said the acquisition will be funded from existing capital and will deliver a return on invested capital between three to five years after completion.
Last year the firm reported surplus regulatory capital of more than £600million. It said the purchase will still leave it with strong headroom and that it will look to return capital to shareholders.
Shares in IG were up 1.27 per cent on Thursday afternoon and have risen 33 per cent over the past 12 months. The firm reports its first half results on 23 January.
What about Freetrade crowdfunding investors?
Freetrade has done various crowdfunding rounds in the past few years looking to raise money from everyday investors.
On social media, there are posts from some who appear to have lost big sums after investing this way.
X user @onscreenlol said he invested £30,000 in January 2021. He adds: ‘Today I’m being forced to sell my shares at £1.19 each for £3.8k.’
That is a loss of £26,200 on the original outlay.
In November 2021, Freetrade sold on Crowdcube for £9.25 per share and raised £8.4million.
Another round in June 2023 saw it go for £2.60 and raised £2.3million. Both had targets of just £1million.
Have you been burnt after buying Freetrade on Crowdcube? Get in touch: editor@thisismoney.co.uk
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