IG Group Enters Direct Investment Market with £160 Million Freetrade Buyout

IG Group, a prominent global financial trading and investment company, has announced its acquisition of Freetrade, a commission-free investment platform, for £160 million. The deal, funded through IGs existing capital resources, marks a strategic move to expand its footprint in the United Kingdom. However, the acquisition remains subject to regulatory approval, expected to be finalised by mid-2025.

This acquisition provides IG with an opportunity to enter the UK's direct investment market, which has demonstrated an annual growth rate of 10%. The market is forecast to continue its strong growth trajectory, driven by favourable structural trends. IG Group's Chief Executive Officer, Breon Corcoran, highlighted the acquisition as a unique chance to strengthen the companys UK trading and investment offerings while broadening its target market.

Freetrade, founded in 2018, has built a strong presence in the investment sector with its user-friendly platform offering access to over 6,200 global stocks, exchange-traded funds (ETFs), fractional shares, UK Treasury bills, ISAs, SIPPs, securities lending, and proxy voting. The platform has attracted 720,000 customers, managing assets worth £2.5 billion as of the end of 2024. In the same year, Freetrade reported revenues of £27.5 million, marking a 32% increase from the previous year. The companys revenue streams are diversified across subscriptions, foreign exchange transaction fees, and interest income.

Despite the acquisition, Freetrade will maintain its independence as a commercially standalone business under IG Group's ownership. The existing leadership team, including co-founder and CEO Viktor Nebehaj, will continue to manage operations. IG plans to invest heavily in Freetrade's growth by expanding its product offerings, enhancing its technology, hiring talent, and increasing marketing efforts. Over the next two years, the majority of Freetrade's forecast profits will be reinvested to scale the business further.

The acquisition is also expected to align with IG's broader financial objectives. The company anticipates a return on invested capital that surpasses its weighted average cost of capital within three to five years. IGs financial stability, evidenced by a regulatory capital surplus of £638 million as of May 2024, supports its strategic initiatives. Additionally, the broker has committed to extending its £150 million share buyback programme to return unused surplus capital to shareholders.