Trading firm acquires UK Robinhood rival Freetrade at a 29% discount.

• IG Group has acquired U.K. Robinhood rival Freetrade for £160 million ($195 million), representing a 29% discount to its previous valuation.
• The potential for further consolidation in the wealth technology industry may be indicated by the deal.
• In 2020, a consortium of investors, including private equity giant CVC Group, acquired Hargreaves Lansdown for £5.4 billion.

IG Group has acquired Freetrade, a British rival to Robinhood.

The startup, Freetrade, was valued at £160 million ($195 million) in the latest deal, which represents a 29% discount from its previous valuation. Despite the discount, Freetrade will continue to operate as a commercially standalone entity under its own brand.

Since its inception in 2016, Freetrade has gained a following among novice traders in the U.K. due to its commission-free trading platform.

The app initially focused on equity trading but later broadened its offerings to include trading in exchange-traded funds, savings products, and government bonds.

During the pandemic, Freetrade experienced a surge in popularity among retail traders, thanks in part to the "short squeeze" of GameStop in early 2021, which saw traders on a Reddit forum for retail investors band together to drive up the stock's price.

The act of borrowing an asset and subsequently selling it on the market with the intention of buying it back at a lower price in the future for a profit is known as short-selling.

In 2022 and 2023, the deteriorating macroeconomic conditions negatively impacted high-performing companies like Freetrade, resulting in a £225 million valuation in 2023, a 65% decrease from its previous valuation of £650 million.

The acquisition of for £5.4 billion by a consortium of investors including private equity giant CVC Group signals potential further consolidation in the wealth technology industry.

Freetrade's acquisition was described by CEO Viktor Nebehaj as a "transformative deal that acknowledges the immense value created by Freetrade."

"With IG Group's substantial resources and support, this presents an exciting opportunity to accelerate our growth and introduce new products and features," he stated.

Freetrade stated that the transaction is subject to customary closing conditions, including regulatory approvals, and anticipates closing the deal later this year.