IG Group (LON: IGG) has acquired Freetrade, a commission-free investment platform, for £160 million to further expand its offerings in the United Kingdom. According to the announcement made today (Thursday), IG’s existing capital resources will fund the deal in cash.
Although the two firms have agreed on the acquisition, it is now pending regulatory approvals, which are expected to be granted by mid-2025.
IG Expanding Its UK Presence
“This is a rare opportunity to strengthen IG's UK trading and investment offering and broaden our target addressable market,” said Breon Corcoran, CEO of IG.
The acquisition will allow IG to enter the UK’s direct investment market, which has grown at an annual rate of 10 percent and “is forecast to grow strongly due to structural drivers.” It will also broaden IG’s existing offerings of contracts for differences (CFDs) and spread betting instruments.
The announcement also clarified that Freetrade will continue to operate as a “commercially standalone business.” IG will retain its existing management, including co-founder and CEO, Viktor Nebehaj.
IG also plans to invest in expanding its product range, hiring talent, adding new features, and increasing marketing activities. The CFD giant further highlighted that it will “reinvest the majority of Freetrade's forecast profit in growing the business over the next two years.”
A Growing Investment Platform
Freetrade offers over 6,200 global stocks and ETFs, fractional shares, UK Treasury bills, ISAs, SIPPs, securities lending, and proxy voting. Launched in 2018, it has onboarded 720k customers with assets under management of £2.5 billion as of the end of 2024.
It also generated £27.5 million in revenue in 2024, a 32 percent year-over-year increase. Freetrade has diversified its revenue streams by splitting them between subscriptions, foreign exchange transaction fees, and interest income.
With the acquisition, IG expects to achieve a return on invested capital exceeding its weighted average cost of capital in years three to five.
“This is an exciting opportunity to accelerate our growth and deliver new products and features on our award-winning platform,” said Nebehaj. “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.”
IG highlighted its regulatory capital surplus of £638 million at the end of May 2024. The broker intends to return the unused surplus capital to shareholders and plans to extend the existing share buyback program of £150 million.
