Freetrade acquired by IG Group at a 29% valuation discount

LONDON – Freetrade, a British rival to popular stock trading app Robinhood, said Thursday it was acquired by online investment platform IG Group.

The deal values ​​Freetrade at £160 million ($195 million), a 29% discount on its last rating. The startup said it would continue to operate as an independent business entity under its own brand.

Founded in 2016, Freetrade gained popularity among mainly younger and inexperienced traders in the UK with its commission-free trading platform.

Initially, the app began offering stocks, but later expanded to implement trading in exchange-traded funds, savings products, and government bonds.

In times of pandemic, free trade was in full retail frenzy. The app benefited greatly from the GameStop “short squeeze” in early 2021, when traders on a Reddit forum for retail investors piled into the stock and caused its price to rise.

Short selling refers to the practice of an investor borrowing an asset and then selling it on the open market with the expectation of repurchasing it for less money in the future to make a profit.

However, worsening macroeconomic conditions in 2022 and 2023 hit Covid leaders like Freetrade hard, and in 2023, Freetrade completed a crowdfunding round in a valuation of £225 million, 65% less than the £650 million it was previously worth.

The deal is a potential sign of further consolidation in the wealth technology industry. comes later 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, described the acquisition as a “transformative deal that recognizes the significant value Freetrade has created.”

“Together with the significant resources and support of IG Group, this is an exciting opportunity to accelerate our growth and delivery of new products and features,” he added.

Freetrade said the transaction is subject to customary closing conditions, including regulatory approvals, adding that it expects to close the deal later this year.