Interactive Investor the subscription-based investment and share trading platform is being acquired by abrdn, as VC backer JC Flowers decides to make a trade sale rather than IPO, the London based company.
Who is buying Interactive Investor?
Interactive Investor is being acquired by ABDN the recently rebranded Aberdeen Standard Life one of the UK’s largest fund management groups. To date, ABDN hasn’t had a high profile direct to consumer channel and by buying II they hope to be able to instantly expand in that space.
ABDN will merge II into its current consumer platform, Personal Vector, though II will be the bigger part of the combined business as it has revenues that are approximately 1.40 times larger than ABDNs existing retail operations.
How much is Interactive Investor being sold for?
ABDN will pay £1.49 billion pounds for II which has more than 400,000 customers and Assets Under Administration, or AUA, of £55.0 billion.
Which using some crude maths suggest that ABDN is paying approximately £3725 per customer or 2.70p in the pound of AUA to acquire the investment platform.
JC Flowers, the US Venture Capital firm that has backed Interactive Investors for many years, had been thought likely to IPO II at some point in 2022.
However, the opportunity to affect a trade sale at an attractive multiple has won the day.
However, the deal will still need to be approved by ABDN shareholders and UK regulators though both counts are likely to be a formality. ABDN will issue £200.00 million of debt to help fund the purchase.
Why is ABDN buying Interactive Investors?
ABDN highlighted the fact that the D2C investment market is currently growing at a compounded rate of approximately 15% per annum and that it expects the market to grow at a similar rate in future, driven by a combination of demographic and structural changes.
Those forces are already shaping the market, for example, millennial and GenZ investors prefer to manage their own money, often through a share trading and investment platform such as Interactive Investor.
II recently highlighted some of the changing trends, that it had observed, in the trial of its discounted Friends and family introduction scheme. Under which new customers were predominantly young and female.
What does the deal mean for II clients?
Speaking about the takeover Richard Wilson, Interactive Investor’s CEO said that:
“This is an exciting new chapter in our history and means that we can focus exclusively on serving those who matter most: our customers. We will have access to ABDN’s additional capabilities across research, advice and wealth management services, and we will benefit from being part of one of Europe’s largest investment and wealth management firms, with a vision and values closely aligned to our own.”
He added that:
“Our management will remain the same, and the same extraordinary team will continually develop our service and technology while maintaining our subscription pricing, our whole of market choice and the same campaigning spirit and editorial independence.”
Managing and screening out potential conflicts of interest between, what has to date been an unaffiliated investment platform, and a business that manufactures and sells its own investment products and funds will be the obvious challenge for IIs management as part of the larger business.
How successful they are at doing that will likely depend on how hands-on ABDN are going to be, in the day to day running of the business, and how comfortable they are with the concept of selling and promoting their competitor’s products.