Abrdn completes £1.5bn Interactive Investor deal

Edinburgh-based investment giant Abrdn has completed its £1.49 billion cash acquisition of Manchester-based Interactive Investor (ii), the UK’s second largest investment platform for private investors.

Abrdn said ii is a “high growth, high margin business” and is expected to be “double-digit accretive to Abrdn’s adjusted earnings.”

Interactive Investor said the platform’s rated products will continue to be independently collated and maintained by Morningstar’s Manager Selection Services Group, working to ii’s methodology and overseen by ii’s Head of Fund Research.

It said all fund managers, including Abrdn, will have to earn their place among ii’s rated investments.

Abrdn said: “This is a growth-driven acquisition for Abrdn’s personal vector.

“Interactive Investor substantially increases scale and expands the company’s addressable market, creating a step change in our combined UK personal wealth offering and additional growth opportunities and diversification to Abrdn’s revenue streams.

“Interactive investor will be able to leverage Abrdn’s deep expertise in financial advice, meticulous research and global perspective.

“In combination, Interactive Investor’s model broadens Abrdn’s existing personal wealth offerings, from high-tech self-directed investing through to high-touch financial planning and discretionary investment management.”

Abrdn said ii is the UK’s leading subscription-based direct investment platform, with over 400,000 customers — and has higher value customers than its peers, with assets under administration per customer of £145,000.

“Under Abrdn’s ownership, ii will continue its campaigning spirit by advocating for important issues such as financial education and enhanced retail access to IPOs,” said ii.

“ii will remain firmly whole of market, instrument agnostic and have zero commercial interest in its customer choice of instrument.”

CEO Richard Wilson will continue to lead Interactive Investor through the next phase of growth under Abrdn’s ownership.

The business will retain its own executive committee management team, with a new board.

“The completion will enable ii to drive its next stage of growth, building on its position as the UK’s second largest investment platform for private investors, with assets under administration of approximately £59bn and over 400,000 customers,” said ii.

“Interactive Investor will gain access to Abrdn’s advice, research and wealth management capabilities to build on its already leading position in the UK’s savings and wealth market.

“Access to high quality advice is becoming increasingly important as people seek to navigate the financial landscape.

“Interactive Investor sees real scope to help customers who want support, utilising Abrdn’s expertise to help them meet their goals around capital preservation and wealth creation.

“There are no changes for any ii customers.

“ii will operate as a standalone business and independent brand and continue to operate on its existing strong technology platform.

“The business will remain a consumer-driven, digital, open architecture investment platform and continue to offer its transparent and fair flat fees for customers.”

Abrdn plc manages and administers £542 billion of assets and has over 1 million shareholders. Its business is structured around three “vectors” – investments, adviser and personal.

Interactive Investor CEO Richard Wilson said: In the past five years, we have built a strong digital consumer business.

“We’ve successfully consolidated the UK platform market while creating better customer outcomes, and in doing so have grown our assets under administration from less than £5bn to c.£59bn.

“Despite volatile market conditions in 2021, we have continued to grow revenue and customer numbers.

“With increased scale has come innovation, a powerful campaigning voice, and even better value, stamping out exit fees along the way.

“Today we join a company with a deep financial services history, and with a shared vision for the future.

“The opportunities that come with joining the Abrdn family are significant.

“We will be working with Abrdn’s talented team to harness their advice, wealth management and research capabilities for the benefit of our customers.”

Abrdn CEO Stephen Bird said: “The acquisition of Interactive Investor is a transformative deal for Abrdn’s personal vector, and marks an important step forward in delivering our strategy for client-led growth.

“ii’s high-tech direct investing service is the perfect complement to the high-touch wealth and financial planning capabilities we already offer.

“As a leading player in a fast-growing market, with a scalable technology platform and a distinctive subscription-based model, the acquisition of ii will also diversify and grow our revenues.”