Abrdn has made a £1.5 billion deal to buy online investment platform Interactive Investor, as the fund manager pushes the increasingly popular web-based trading sector.
Abrdn, known as Standard Life Aberdeen until it changed its vowel name earlier this year, said it was acquiring a fast-growing business with 46,000 customers last year, excluding brands. acquisitions, accounting for a total of over 400,000.
The business was purchased from the majority shareholder, JC Flowers, a US private equity firm, which controlled Interactive Investor through a parent company, Antler Holdco, registered in Guernsey.
The move heralds a significant expansion of Abrdn into the direct investment sector. Companies like Interactive Investor and its rival Hargreaves Lansdown give individual “retail” investors the opportunity to exercise control, rather than delegate responsibility to the fund manager.
They have become increasingly popular thanks in part to the development of web-based applications and platforms that have made trading easier, fueling a growing interest in trading financial instruments.
While apps like Robinhood and eToro target small-time “day traders,” often looking for quick profits from sometimes controversial assets like cryptocurrencies, Interactive Investor has self-promoting to another group of customers.
Day trading platforms typically don’t charge registration fees, instead taking a cut of trading and charging withdrawal fees.
The Interactive Investor’s entry-level product requires a £9.99-per-month subscription, with customers able to set up an automated investment plan for free but be charged if they make a lot of trades per month .
Its customer base leans more towards the elderly and affluent, with customers more likely to be willing to invest for long-term returns.
The average client is a 57-year-old with £137,454 deposited in the firm, significantly more than both day traders and the £82,000 average at Hargreaves Lansdown and AJ Bell.
Richard Wilson, chief executive of Interactive Investor, will continue to lead the business, with £55 billion in assets under management that will increase Abrdn’s direct investment business fivefold, to 69 billion pounds.
Wilson is expected to report directly to Abrdn chief executive Stephen Bird, who has made retail expansion a priority for the Edinburgh-based company, known for its wealth management. Traditionally on behalf of the client.
Bird said the deal is a “unique opportunity and a transformative step in delivering on our growth strategy.”
Interactive Investor was founded in 1994 by businessman Sherry Coutu, who ran the business until it emerged on the London Stock Exchange in 2000.
She left after it was acquired the following year by Australia’s AMP, which briefly rebranded the business, folding it into its own Ample brand. The chief executive officer, Tomas Carruthers, spearheaded an acquisition in 2003, which resulted in US private equity firm JC Flowers majority ownership.
