By Mark McSherry
Edinburgh-based investment giant Abrdn announced plans on Thursday to acquire Manchester-based investment platform Interactive Investor for £1.49 billion.
Interactive Investor is a subscription-based platform within the “high-growth UK direct investing market” with over 400,000 customers and assets under administration (AUA) of £55 billion.
Before the acquisition, Abrdn managed and administered £532 billion of assets around the world.
Abrdn said it agreed to acquire 100% of the ordinary share capital of the holding company of Interactive Investor Limited from its shareholders including J.C. Flowers IV L.P. and key members of Interactive Investor’s management.
As part of the acquisition, Interactive Investor CEO Richard Wilson will join Abrdn and continue to lead Interactive Investor, which will operate as a standalone business within Abrdn’s “personal vector.”
Abrdn said: “Interactive Investor has grown rapidly, attracting high-value customers and is expected to continue to deliver a strong profile of growth and efficiency.
“The acquisition is expected to be double-digit earnings accretive in the first full financial year following completion.
“The acquisition will be funded in cash from Abrdn’s capital resources.
“Following the acquisition, Abrdn’s capital position will remain strong with an indicative pro forma regulatory capital surplus (post IFPR) of c.£0.5 billion and in addition c.£2.5 billion of value from our listed investments.
“We intend to issue Additional Tier 1 debt of c.£200 million to optimise our capital structure.”
Completion of the acquisition is subject to the satisfaction of customary conditions including regulatory consents and Abrdn shareholder approval.
Abrdn said that following the acquisition, its “personal vector” will have scale and relevance with fee based revenue more than doubling from £83 million to £199 million on a pro forma basis.
“The UK direct investing market benefits from accelerating demographic and structural market trends,” added Abrdn.
“In combination, the high-tech, high-touch models of Interactive Investor and Abrdn can enable clients to become better investors and create more opportunities for their financially secure futures.
“The acquisition is a material step in our building of a leadership position in the personal wealth market, with AUMA in the personal vector increasing nearly fivefold to £69 billion on a pro forma basis.
“Abrdn considers the investment choices, flexibility and fixed fee pricing model that interactive investor offers customers, and its ethos as a consumer champion, to positively differentiate it in the market.
“Abrdn is therefore committed to interactive investor’s standalone open-architecture, subscription-based revenue model for the long-term.”
Abrdn CEO Stephen Bird said: “This is a unique opportunity and a transformative step in delivering our growth strategy.
“Interactive Investor is the UK’s number one subscription-based investing platform with a powerful reputation as a consumer champion.
“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.
“I am delighted that Richard Wilson and his team will continue to lead interactive investor.”
Interactive Investor CEO Richard Wilson said: “This is an exciting new chapter in our history and means that we can focus exclusively on serving those who matter most: our customers.
“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.
“Our management will remain the same, and the same extraordinary team will continually develop our service and technology, while maintaining our subscription pricing, our whole of market choice and the same campaigning spirit and editorial independence.”