Freetrade has raised IG for £160 million, but crowdfunding investors complain they are losing out

Online trading platform IG Group has bought free stock trading app Freetrade for £160 million.

London-based FTSE 250 participant IG said the purchase, expected to close in mid-2025, will help grow the UK’s trading and investment offering and open up new customer segments and opportunities.

Launched in 2018, Freetrade has 720,000 customers in Britain and will have £2.5 billion under management at the end of 2024.

The investment platform’s rapid growth saw it backed by crowdfunding investors in a series of funding rounds, reaching a valuation of £650m at some point in 2021.

Now many of these investors are facing significant losses, with sales at a huge discount to those high valuations. There are reports on social media of some who appear to have lost large amounts of money after investing in this way.

X user @onscreenlol said he invested £30,000 in January 2021. He added: ‘Today I am being forced to sell my shares at £1.19 each for £3.8k.’

That’s a loss of £26,200 on their original expenditure.

Freetrade benefited from the pandemic technology and trading boom, with investors attracted to its no-fee stock trading and eye-catching pink branding

In September, Freetrade posted its first profitable six months since its founding.

Freetrade posted an operating profit of £91,000, up from a previously adjusted loss of £5.6 million in the first half of the 2023 financial year.

Freetrade also withdrew from the Swedish market in August to focus exclusively on the British market.

Yet the platform’s revenue grew by 32 percent to £27.5 million in 2024, with record sales in the fourth quarter of the financial year.

Viktor Nebehaj (left) was one of the early investors in Freetrade, founded by Adam Dodds (right), and subsequently became Chief Marketing Officer and then CEO

Viktor Nebehaj (left) was one of the early investors in Freetrade, founded by Adam Dodds (right), and subsequently became Chief Marketing Officer and then CEO

Breon Corcoran, CEO of IG, said: “This is a rare opportunity to strengthen IG’s UK trading and investment offering and broaden our target audience.

‘Freetrade is one of the most successful emerging players in the UK direct-to-customer investment market, with a strong brand, highly scalable technology and rapid growth.’

IG will maintain Freetrade as a standalone entity and brand, with the company’s CEO and co-founder Viktor Nebehaj remaining at the helm alongside the current leadership team, who will continue their efforts to continue to grow the company.

Nebehaj said: “This is an exciting opportunity to accelerate our growth and delivery of new products and features on our award-winning platform.

“IG’s vision for Freetrade is closely aligned with ours and its support will be of great benefit as we continue to scale the business.”

Following the purchase, IG will further expand Freetrade’s product range, add new features and increase market activity.

It said most of Freetrade’s expected profits will be reinvested to grow the business over the next two years.

Freetrade currently offers over 6,000 shares and ETFs, fractional shares, UK government bonds, Isas, Sipps and proxy voting.

IG said the acquisition will be financed from existing capital and will deliver returns on invested capital within three to five years of completion.

Last year the company reported a surplus of regulatory capital of more than £600 million. The company said the purchase will still provide significant headroom and that it will look to return capital to shareholders.

Shares of IG rose 1.27 percent on Thursday afternoon and are up 33 percent in the past 12 months. The company will publish its first half results on January 23.

Acquisition: IG Group says Freetrade purchase will deliver a return on the £160m it spent to acquire the platform

Acquisition: IG Group says Freetrade purchase will deliver a return on the £160m it spent to acquire the platform

What about Freetrade crowdfunding investors?

Freetrade has done several crowdfunding rounds in recent years to raise money from ordinary investors.

In November 2021, Freetrade sold on Crowdcube for £9.25 per share and raised £8.4 million. At the peak of the pandemic, Freetrade’s valuation was £650 million.

Another round in June 2023 raised £2.60 and raised £2.3 million. Both had a target of just £1 million.

But Freetrade’s valuation had fallen 65 per cent to £225m by 2023 during crowdfunding.

Did you get burned after buying Freetrade on Crowdcube? Contact: editor@thisismoney.co.uk

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