In London, Freetrade, a British competitor to the well-known stock trading app Robinhood, announced on Thursday its acquisition by the online investing powerhouse IG Group.
This acquisition places Freetrade’s worth at £160 million ($195 million), marking a 29% dip from its previous valuation. Despite the acquisition, the startup plans to maintain its operations as an independent entity, continuing under its own brand.
Freetrade, established in 2016, quickly became a favorite among young, novice traders in the UK due to its zero-commission trading service. Initially, it offered trades in equities but soon expanded its offerings to include exchange-traded funds, savings products, and government bonds.
During the pandemic, Freetrade thrived amidst a surge in retail trading activity. One notable moment was during the GameStop “short squeeze” in early 2021, which saw retail investors from a Reddit forum driving up the stock’s price significantly.
In the stock market, “short-selling” means that an investor borrows a stock to sell it on the market, hoping to buy it back later at a lower price to make a profit.
However, by 2022 and into 2023, deteriorating macroeconomic conditions impacted Freetrade’s rise. In 2023, it held a crowdfunding round valuing the company at £225 million, a stark 65% drop from its previous valuation of £650 million.
This deal might hint at more consolidation within the wealth technology sector. It’s notable following the acquisition of Hargreaves Lansdown for £5.4 billion by a group of investors led by the private equity giant CVC Group.
Freetrade’s CEO and co-founder, Viktor Nebehaj, called the acquisition a “transformative deal that acknowledges the enormous value Freetrade has built.” He expressed excitement about the growth prospects fueled by IG Group’s resources and support, allowing for an accelerated rollout of new products and features.
Freetrade noted that the deal is pending customary closing conditions, including regulatory approvals, and expects to finalize it by the end of the year.
