Fund giant Abrdn has confirmed it is in discussions to buy DIY investing platform Interactive Investor following speculation at the weekend.
In a short statement, the FTSE 100 asset manager said it was in talks with Interactive Investor’s largest shareholder – private equity firm JC Flowers – over a possible acquisition, but added there was ‘no certainty’ a deal would be reached.
The potential takeover, first reported by Sky News yesterday, would mark a sharp change of direction for Interactive Investor, which has been planning to float on the London Stock Exchange.
Takeover talks: Abrdn has confirmed it is in discussions to buy Interactive Investor
In August, II was said to be eyeing a market listing in 2022 that could have valued it at up to £2billion.
Such a move, which the company has not ruled out yet, could see it join major rivals Hargreaves Lansdown and AJ Bell, which listed in London in 2007 and 2018 respectively.
‘An IPO remains an attractive and possible outcome, and discussions around the process are also under way,’ a spokesperson for II said.
The DIY investing platform has been mulling a flotation for some years, with chief executive Richard Wilson telling This Is Money in 2019 of his ambition to follow the two rivals to become a listed company.
But these plans could be put to rest by a potential takeover by Abrdn, which would benefit from such a deal as it plans to sell more products directly to customers.
The fund manager, which manages £535billionn for clients, rebranded to the new vowel-less name in April in a bid to modernise the company, and shift away from mainly selling investment funds and towards wealth management for individuals and digital services for financial advisers.
Only last month, it snapped up Finimize, a subscription-based investment tips service popular with millennial traders, highlighting its renewed focus towards personal investing-oriented activities.
If it were to take on II, it could start selling its funds on the platform.
Under new chief executive Stephen Bird, who took over last year, Abrdn has been been trying to escape a poor run of performance which has dogged it since its 2017 merger of Standard Life and Aberdeen Asset Management.
On the other hand, investing platforms have benefited from a growing number of investors during the pandemic.
Hargreaves Lansdown, AJ Bell and II all saw record levels of new customers and asset flows in the past year as more people became stock market investors for the first time.
Hargreaves Lansdown, AJ Bell and Interactive Investor all saw record levels of new customers and asset flows in the past year
II has been y building its business to take on rivals and is now Britain’s second largest investment site after Hargreaves, with more than 400,000 customers and about £57billion in assets under administration.
In March, it snapped up Equiniti’s share dealing, ISA and SIPP accounts for £48.5million, having previously acquired The Share Centre, Alliance Trust and TD Direct.
II, which unlike its rivals offers a subscription service where customers pay £9.99 a month to manage Isas and trading accounts, reported a 19 per cent rise in revenue to £76million in the first half.
But Hargreaves, which counts some 1.5million customers, has seen business cool down a little since the summer.
It recently posted a 1 per cent fall in revenues to £142.2million for the three months to 30 September as share dealing volumes declined.
But it still had some £138billion of assets under management as at 30 September 2021, up 2 per cent since the end of June.
AJ Bell has continued to see a strong performance, with the total number of customers rising by 30 per cent to 382,754 in the year to the end of September and assets under management increasing by 29 per cent to £72.8billion.
Boring Money chief executive, Holly Mackay, said: ‘Any acquisition could be important for a small army of savvy DIY investors when it comes to fee disruption and innovation.
‘Over the last few years Interactive Investor has been steadily acquiring all the fixed-fee platforms in the UK market, making it the only major player with this model.
‘Fixed-fee advocates have run out of choices for any other major established platform supporting well-diversified assets and investments and pensions. Any future changes to Interactive’s pricing model would be a blow.’
She added: ‘I suspect we’ll see a returned focus to DIY investing from the Big Boys – but after a decade of technological transformation and focus, they know they need content and customers as well as transactions and tech. It should be an interesting few years ahead.’
Compare the best DIY investing platforms and stocks & shares Isa
When it comes to choosing an investment platform, stocks & shares Isa or a general investing account, the range of options might seem overwhelming.
Every provider has a slightly different offering, charging more or less for trading or holding shares and giving access to a different range of stocks, funds and investment trusts.
When weighing up the right one for you, it’s important to to look at the service that it offers, along with administration charges and dealing fees, plus any other extra costs.
To help you compare investment accounts, we’ve crunched the facts and pulled together a comprehensive guide to choosing the best and cheapest investing account for you.
We highlight the main players in the table below but would advise doing your own research and considering the points in our full guide linked here.
|Admin charge||Charges notes||Fund dealing||Standard share, trust, ETF dealing||Regular investing||Dividend reinvestment|
|AJ Bell YouInvest||0.25%||Max £3.50 per month for shares, trusts, ETFs.||£1.50||£9.95||£1.50||1% (Min £1.50, max £9.95)||More details|
|Charles Stanley Direct||0.35%||No platform fee on shares if a trade in that month and annual max of £240||Free||£11.50||n/a||n/a||More details|
|Fidelity||0.35% on funds||£45 fee up to £7,500. Max £45 per year for shares, trusts, ETFs||Free||£10||Free funds £1.50 shares, trusts ETFs||£1.50||More details|
|Hargreaves Lansdown||0.45%||Capped at £45 for shares, trusts, ETFs||Free||£11.95||£1.50||1% (£1 min, £10 max)||More details|
|Interactive Investor||£119.88 as £9.99 per month||£7.99 per month back in trading credit||£7.99||£7.99||Free||£0.99||More details|
|iWeb||£100 one-off||£5||£5||n/a||2%, max £5||More details|
|Freetrade||Free for standard account £3 month for Isa||Freetrade Plus with more investments is £9.99/month inc. Isa fee||No funds||Free||n/a||n/a||More details|
Only Vanguard funds
|Free||Free only Vanguard ETFs||Free||n/a||More details|
|(Source: ThisisMoney.co.uk July 2021. Admin charges quoted annually, may be monthly or quarterly)
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