Abrdn, one of Britain’s largest fund managers, is in advanced talks on a £ 1.5bn takeover of stock trading service Interactive Investor (II) with the aim of dramatically expand its reach into the retail investment market.
Asset manager FTSE 100 has entered into exclusive discussions with II as it attempts to gain a foothold in the retail investment market. It is hoped that an agreement can be finalized within the next two weeks.
A deal would end II’s ambition to launch a London roster next year according to Sky News, which first reported the story.
Stephen Bird, managing director of abrdn, is trying to rekindle investor enthusiasm after four disappointing years after the £ 11 billion merger of Standard Life and Aberdeen Asset Management in 2017.
II, which is owned by US buyout fund JC Flowers & Co, has more than 400,000 personal investor clients, one million users and approximately £ 57 billion in assets under administration.
Abrdn said, “The company takes note of recent media speculation and confirms that it is currently in discussions with JC Flowers & Co regarding a potential acquisition of Interactive Investor.
“There can be no certainty that these discussions will result in a transaction and another announcement by the company will be made if appropriate.”
It is the second largest player in the UK retail investment market after Hargreaves Lansdown. The company has grown rapidly through a series of takeovers, buying out competitors TDDI, ATS, The Share Center and EQi’s direct-to-consumer arm over the past four years.
Mr Bird said during the half-year results in August that abrdn’s personal investment arm will need a bigger scale to achieve its ambitions.
He added: “For our smallest driver, staff, we have made it clear that growth will require further acquisitions to gain momentum.
“We also need to invest in technology to develop our digital savings and wealth offering directly to consumers. “
Abrdn recorded outflows of almost £ 6 billion in the first half of the year. But pre-tax profits jumped by more than three-quarters to £ 163million, a boost for Mr Bird, who was forced to restructure the ailing company.
The potential deal comes after abrdn – who was widely ridiculed for his name change after Standard Life Aberdeen’s name change in April – offloaded another portion of his stake in India-based life insurer HDFC for £ 268million in September.
Abrdn took over the Finimize investment advice subscription service last month in a deal that Bird described as supporting his “strategic ambition to generate client-led growth.”
Shares of abrdn have fallen more than 11pc since the start of the year, closing at 255.7p on Friday.
A spokesperson for II said: ‘As the UK’s leading subscription-based consumer investment platform, with over 400,000 customers and an AUA of around £ 55 billion, II has sparked the interest of a number of parties.
“Discussions with abrdn are ongoing, there is no certainty that these discussions will result in a transaction.
“An initial public offering remains an attractive and possible outcome, and discussions around the process are also ongoing. “