Online dealing and investing platform, Interactive Investor has been on the acquisition trail splashing out £48.50 million on the purchase of a book of retail customers from Equiniti.
The acquisition will lift Interactive Investor’s assets under administration by £5.0 billion to £50.0 billion and will increase the businesses customer base from 350,000 to 400,000.
Meaning that interactive investors have effectively paid £970.00 per customer through the purchase.
Those customers used Equiniti for flat fee execution-only dealing under the EQi brand.
No frills share dealing is something that Interactive investors have plenty of experience with and Richard Wilson CEO of interactive Investors said that:
“I look forward to welcoming EQi customers to the II platform, where we hope they will benefit from our no-nonsense fixed-fee pricing, commitment to service and continuously developing technology and content”
Interactive investors have grown their business organically and through acquisitions in the past. Indeed it bought TD Direct Investing in 2017, Alliance Trust Savings in 2019 and Share PLC in 2020.
Speaking about the latest acquisition Richard Wilson commented that
“This marks another important milestone in the II story, having brought together five established investment businesses within the last four years to create a single market-leading platform that offers the retail investor real choice and value.”
Low-cost share trading platforms are all about trying to achieve economies of scale which help to drive down costs for the business as a whole. Increasing the customer base also provides the opportunity for cross-selling and Interactive Investors must have seen the potential for this, to justify the cost of acquisition.
Whether buying this business from Equiniti turns out to be good value or not will be determined by how many former Equiniti clients stay with their new home, how active they are if they do, and the longevity of their trading and investing accounts.
Of course, the last 12 months have witnessed a huge surge in retail trading and investing activity. Interactive Investors is doubtless hoping to ride that wave for as long as it can.
The businesses 25-year track record and demonstrable ability in quickly integrating previous acquisitions suggests that it is well placed to make that judgement.
We wouldn’t be surprised at all to see further consolidation in this space across 2021 as larger players seek to bulk up on both client and assets.
Darren is a veteran of the financial markets with almost 36 years of experience under his belt. He has worked in trading, sales, analytical, and research roles, he has been a regular guest & commentator on financial television channels and publications. During his career, Darren has been fortunate to act for and advise major hedge funds and investment banks as well as HNWI. Darren analyses the markets using a blend of technical and fundamental analysis