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Thursday, December 2, 2021

Abrdn is negotiating to finalize a £1.5 billion acquisition of Interactive Investor

According to people familiar with the matter, Abrdn, the FTSE 100 index asset management company, is finalizing a deal for £1.5 billion to acquire Interactive Investor, the second largest fund supermarket in the UK, to deepen its direct-to-consumer business.

Abrdn confirmed in a statement on Saturday that it is currently in discussions with JC Flowers and Co, a private equity group that has a majority stake in Interactive Investor since 2016. The deal may be announced as early as Monday morning, and one of the people familiar with the matter added it. Abrdn is working with bankers at JPMorgan Chase.

Through the acquisition of Interactive Investor, Abrdn will acquire a business that has more than 400,000 customers and manages approximately £55 billion. Stephen Bird, Abrdn’s chief executive, said this year that he has been looking to expand his presence in the UK advisory and consumer market. Its direct-to-consumer products are the smallest business line within the asset management company.

The acquisition of Abrdn comes at a time when consolidation continues to sweep the asset management industry, which is struggling to cope with cost pressures, long-term low interest rates and increasingly strict regulations. Such transactions would overturn Interactive Investor’s initial public offering plan, which was conducted in the context of the retail investment boom during the pandemic.

Interactive Investor said that negotiations with Abrdn are still ongoing, but other parties have approached the company, and an IPO is still an attractive option. “around [IPO] The process is also in progress,” Interactive Investor said.

The acquisition of institutional investors will mark Bird’s most high-profile move to date. He took over a company in September last year that failed to fulfill the promise formed by Aberdeen Asset Management’s acquisition of rival Standard Life.

Bird has made it clear that Abrdn will pursue growth through acquisitions and emphasized the need to invest in technology to expand its direct-to-consumer digital savings and wealth products. As of June 30, Abrdn had surplus regulatory capital of £2.8 billion.

In April, Standard Life Aberdeen announced that it would change its name to Abrdn in an effort to delay it for several years. When the merger was completed in August 2017, the newly formed group had assets of £670 billion. Since then, as of June 30, assets under management have been reduced to 465.3 billion pounds, as the company has suffered customer outflows for many years. Abrdn lost Schroders’ title as the UK’s largest independent asset management company.

Interactive Investor accounts for about one-fifth of the retail investment platform market and competes with listed competitors Hargreaves Lansdown and AJ Bell. The group has been promoting the integration of wealth management and in March acquired a direct-to-consumer investment platform from rival Equiniti for £48.5 million.

Analysts at brokerage Numis said that Interactive has acquired almost all UK platforms that share its fixed fee model and questioned the room for further growth through further transactions.

Sky News first reported on the negotiations after Abrdn agreed last month to acquire the startup Finimize, which sent investment tips to approximately 1 million retail investors. In Abrdn’s half-year performance, the group has listed the UK advisory and consumer market as a strategic focus along with technology, private markets, responsible investment and growth in Asia.

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