Abrdn is in talks to take over the online stockbroker Interactive Investor in a move that will give the FTSE 100 fund manager greater direct access to consumers and expand its digital capabilities.
The deal, which Sky News said valued II at £1.5 billion, comes amid speculation about deals in the financial services sector and a boom in mergers and acquisitions.
Even though the talks are under way, II — owned by private equity firm JC Flowers — is also continuing to work on the stock market flotation that was mooted this year by its chief executive Richard Wilson.
According to Sky, the aim is to clinch a deal in the next two weeks. The report of the talks led to an emergency announcement by Abrdn, formed by the merger of Standard Life and Aberdeen Asset Management in 2017.
“The company notes recent media speculation and confirms that it is in discussions with JC Flowers regarding a potential acquisition of Interactive Investor,” Abrdn said.
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“There can be no certainty that these discussions will result in a transaction and a further announcement by the company will be made as and when appropriate,” the Scottish-based company said.
II has been majority owned by JC Flowers since 2016 and has expanded through a series of acquisitions of its own, including of TDDI, Alliance Trust Savings and The Share Centre. In a statement yesterday, II said it had “attracted interest from a number of parties”.
“Discussions with Abrdn are ongoing, there can be no certainty that these discussions will result in a transaction. An IPO remains an attractive and possible outcome, and discussions around the process are also under way,” a spokesperson for the company said.
II has more than 400,000 customers, making it second in size to Hargreaves Lansdown. Along with AJ Bell, online brokers have enjoyed a boom in trading by customers at home during Covid-19 lockdowns and looking for returns in the stock market when interest rates are low. At the half year, II reported a 19 per cent rise in revenue to £76 million.
Unlike its rivals it offers a subscription service where customers pay £9.99 a month to manage Isas and trading accounts.
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For Stephen Bird, Abrdn’s chief executive, it is a key moment to win support from investors who have suffered a near-40 per cent plunge in the share price over the past five years. Bird, a former executive at Citi, took over last year and had attempted to set out a clear strategy for the enlarged business in three areas — investment, adviser and personal. At the half year, Abrdn reported a rise in profits of 52 per cent and a reduction in costs for the first time since the merger.
A deal for II would meet his goal of giving Abrdn access to II’s 400,000 customers and could lead to Abrdn’s funds being sold on the platform. After unveiling its new brand identity and name in April, it is not yet clear if II would also change its name to Abrdn.
II has been through a number of changes of ownership since it was set up in 1995 and used different names. It was floated on the stock market in 2000 before being bought by AMP of Australia and rebranding as Ample in 2002.
