Abrdn buys Interactive Investor for £1.5bn

Abrdn buys Interactive Investor for £1.5bn

Abrdn has agreed to buy investment platform Interactive Investor.

The deal is worth £1.49bn and will see Interactive Investor’s chief executive Richard Wilson remain in his role. The platform will operate as a standalone business within Abrdn’s "personal vector" division.

Wilson said the platform's management will remain the same, alongside its subscription pricing. 

“We will have access to Abrdn'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.”

For its part, Abrdn said the acquisition would "diversify revenue" and "transform" its current focus on financial planning and discretionary investment management.

A potential deal was first reported in early November and Abrdn confirmed it was in talks with JC Flowers & Co, the private equity firm that holds a majority stake in Interactive Investor.

Following the deal, Abrdn will issue £200m in debt to “optimise” its capital structure, though it will still have £500m in surplus capital.

Interactive Investor is the second-largest DIY investment platform after Hargreaves Landsdown. It is a subscription-based platform and has 400,000 customers and assets under administration of £55bn.

DIY investing has boomed during the pandemic, with the number of customer accounts on these platforms increasing by 47 per cent since March 2020, according to Boring Money.

This included a rise in customer accounts of 10 per cent in the first quarter this year, the fastest rate of quarterly growth since Boring Money started tracking the figures in 2015.

Stephen Bird, chief executive of Abrdn, said: "This is a unique opportunity and a transformative step in delivering our growth strategy. 

“Abrdn's scale, resources, and shared vision will enable Interactive Investor to grow confidently and expand its leadership position in the UK's attractive savings and wealth market.”

Abrdn said the acquisition was a “material step in the building of a leadership position” in the personal wealth market. The company added that Interactive Investor’s “consumer champion ethos” differentiated it from its competitors.

The deal comes after a period of change for Abrdn, formerly Standard Life Aberdeen, which re-branded in April this year after selling the Standard Life brand to Phoenix Group.

The group had struggled since the merger of Aberdeen Asset Management and Standard Life in 2017, with joint chief executives Martin Gilbert and Keith Skeoch both departing the business in the following years.

The firm's 2020 accounts showed net outflows of £29bn, with adjusted pre-tax profits down 17 per cent to £487m.

Bird has previously hinted he wants to grow the firm through acquisitions, and at June 30 the firm had £2.8bn in regulatory capital, according to its results. 

In August Abrdn bought AI-driven business Exo Investing to launch a 24/7 digital wealth management solution.

Then last month, Abrdn bought investment platform Finimize.