Freetrade application on smartphones and desktop PCs.
free trade
LONDON—Freetrade, the British rival of popular stock trading app Robinhood, announced Thursday that it has been acquired by online investment platform IG Group.
The deal values Freetrade at £160 million ($195 million), a 29% discount to its previous valuation. The startup said it will continue to operate as a commercially independent entity under its own brand.
Founded in 2016, Freetrade gained popularity among young and inexperienced traders, primarily in the UK, due to its commission-free trading platform.
The app initially started out offering stocks, but later expanded to include trading in exchange-traded funds, savings products, and government bonds.
Free trading has been booming during the pandemic, riding the retail trader frenzy. The app benefited greatly from GameStop’s “short squeeze” in early 2021. At the time, traders on Reddit forums for retail investors flooded into the stock, causing the price to rise.
Short selling refers to the act of an investor borrowing an asset and selling it on the open market with the hope of buying it back in the future for a lower amount at a profit.
However, the deterioration of macroeconomic conditions in 2022 and 2023 hit COVID-19 high-paying companies like Freetrade hard. And in 2023, Freetrade completed a crowdfunding round at a valuation of £225m, down 65% from its previous valuation of £650m.
The deal signals the potential for further consolidation in the wealth technology industry. This comes after Hargreaves Lansdown was acquired for £5.4bn by a consortium of investors including private equity giant CVC Group.
Freetrade CEO and co-founder Viktor Nebehaj described the acquisition as a “transformational transaction that recognizes the significant value created by Freetrade.”
“Combined with IG Group’s significant resources and support, this is a great opportunity to accelerate our growth and delivery of new products and capabilities,” he added.
Freetrade said the transaction is subject to customary closing conditions, including regulatory approvals, adding that it expects the transaction to close in the second half of this year.
