UK Robinhood Rival Freetrade Acquired at 29% Valuation Discount

Freetrade, a UK-based commission-free trading platform often compared to Robinhood, has been acquired by IG Group, a global leader in online trading and investments. The deal, valued at £160 million, represents a 29% discount to Freetrade's last valuation. The acquisition is expected to strengthen IG Group's UK trading and investments offering and provide access to new customer segments and capabilities.

Freetrade, founded in 2018, has become one of the most successful emerging players in the UK direct-to-customer investment market. With 720,000 customers and AUA of £2.5 billion as of the end of 2024, Freetrade has demonstrated strong growth momentum, with net flows in 2024 equivalent to 22% of starting AUA. The platform offers a wide range of products, including over 6,200 global stocks and ETFs, fractional shares, UK Treasury bills, ISAs, SIPPs, securities lending, and proxy voting.

IG Group, which will operate Freetrade as a commercially standalone business, plans to invest in expanding Freetrade's product range, hiring talent, adding new features, and increasing marketing activity to accelerate growth. Viktor Nebehaj, CEO and co-founder of Freetrade, 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."

The acquisition is expected to achieve a return on invested capital in excess of the Group's weighted average cost of capital in years three to five. IG Group will acquire 100% of Freetrade for an enterprise value of £160 million, which will be funded in cash from existing capital resources. Completion is subject to customary conditions, including regulatory approvals, and is currently expected in mid-2025.

The acquisition of Freetrade by IG Group is a strategic move that enhances IG's UK trading and investments proposition, broadens its target addressable market, and provides access to a strong brand in the direct-to-customer trading and investments market. Freetrade's proprietary, highly scalable technology, well-diversified revenue streams, and strong customer acquisition and retention rates make it an attractive acquisition target. With IG Group's backing, Freetrade is poised to accelerate its growth and solidify its position in the UK trading market.

In conclusion, the acquisition of Freetrade by IG Group is a transformative deal that recognizes the significant value that Freetrade has created in the UK trading market. Together, the two companies will be well-positioned to capitalize on the growing demand for commission-free trading platforms and continue to innovate and expand their offerings.