Abrdn has reached a £ 1.5 billion deal to buy online investment platform Interactive Investor, as the fund manager enters the increasingly popular realm of online trading.
Abrdn, which was known as Standard Life Aberdeen until an anti-vowel name change earlier this year, said it was acquiring a fast-growing business that added 46,000 customers last year, excluding acquisitions, bringing the total to over 400,000.
The company was purchased from majority shareholder JC Flowers, a US private equity firm, which controlled Interactive Investor through a holding company, Antler Holdco, registered in Guernsey.
This decision heralds a significant expansion of Abrdn in direct investment. Companies such as Interactive Investor and rival Hargreaves Lansdown allow individual “retail” investors to exercise control, rather than handing over responsibility to a fund manager.
They have become increasingly popular thanks in part to the development of applications and web platforms that facilitate trading, fueling an increased interest in trading financial instruments.
While apps like Robinhood and eToro have targeted smaller ‘day traders’, often looking for a quick profit on sometimes controversial assets like cryptocurrency, Interactive Investor has launched out with a different clientele.
Day trading platforms typically don’t charge subscription fees, taking a share of trades and charging withdrawal fees instead.
Interactive Investor’s entry-level product requires a subscription of £ 9.99 per month, with clients being able to set up automatic investment plans for free but charged if they make more than one trade per month.
Its clientele is older and richer, with clients more likely to be willing to invest for longer-term returns.
The average client is a 57-year-old male with £ 137,454 deposited with the company, far more than the two day traders and the average £ 82,000 at Hargreaves Lansdown and AJ Bell.
Richard Wilson, Managing Director of Interactive Investor, will continue to lead the company, whose £ 55bn in assets under administration will increase Abrdn’s direct investment business fivefold to £ 69bn.
Wilson is expected to report directly to Abrdn chief executive Stephen Bird, who has made expanding retail investment a priority for the Edinburgh-based company, best known for traditional asset management on behalf of its clients. .
Bird said the deal was a “unique opportunity and a transformative step in the implementation of our growth strategy”.
Interactive Investor was founded in 1994 by entrepreneur Sherry Coutu, who ran the company until it was floated on the London Stock Exchange in 2000.
It left after its takeover the following year by Australian AMP, who briefly renamed the company, integrating it into its own brand Ample. Managing Director Tomas Carruthers completed a buyout in 2003, leading to a majority stake in US private equity firm JC Flowers.