Freetrade Acquired by Trading Firm at 29% Valuation Discount in UK Deal
In a significant move in the financial technology sector, British stock trading app Freetrade has announced that it has been acquired by online investing platform IG Group. This deal, valued at £160 million ($195 million), represents a 29% discount to Freetrade’s last valuation.
A Game-Changer in the Wealth Technology Industry
Founded in 2016, Freetrade quickly gained popularity among younger and less experienced traders in the UK with its zero-commission trading platform. Initially focusing on equities, the app later expanded its offerings to include exchange-traded funds, savings products, and government bonds.
During the pandemic, Freetrade experienced a surge in user activity, particularly during the GameStop “short squeeze” in early 2021. This event, fueled by retail investors on a Reddit forum, led to a significant increase in the stock price.
However, as macroeconomic conditions deteriorated in 2022 and 2023, Freetrade, like many other companies, faced challenges. In 2023, the company completed a crowdfunding round at a valuation of £225 million, down 65% from its previous valuation of £650 million.
Implications for the Future of Wealth Technology
This acquisition of Freetrade by IG Group may signal further consolidation in the wealth technology industry. Just recently, Hargreaves Lansdown was acquired for £5.4 billion by a consortium of investors, including private equity giant CVC Group.
Viktor Nebehaj, CEO and co-founder of Freetrade, expressed optimism about the deal, describing it as “transformative” and acknowledging the value that Freetrade has created. He emphasized the exciting opportunity to accelerate growth and introduce new products and features with the support of IG Group’s resources.
The transaction is still pending regulatory approvals and other closing conditions, with the expectation that it will be finalized later this year.
The Human Side of Freetrade: A Personal Story
Imagine being a young investor navigating the complexities of the stock market for the first time. Freetrade, with its user-friendly interface and zero-commission model, offered a lifeline to many individuals looking to dip their toes into investing.
The acquisition of Freetrade by IG Group may bring about changes, but it also represents a new chapter in the evolution of wealth technology. As investors, we must stay informed and adapt to the shifting landscape to make the most of our financial opportunities.
