FTSE 100 asset manager Abrdn is finalizing a deal to buy Interactive Investor, the UK’s second-largest fund supermarket, for Â£ 1.5bn in a bid to deepen its business direct-to-consumer sales, according to people with direct knowledge of the subject.
Abrdn confirmed in a statement on Saturday that it is currently in talks with JC Flowers and Co, the private equity group that has held a majority stake in Interactive Investor since 2016. The deal could be announced in the coming weeks, according to the company. one of the people added. Abrdn works with bankers at JPMorgan.
By acquiring Interactive Investor, Abrdn would take over a company that has more than 400,000 clients and manages around Â£ 55 billion. Abrdn chief executive Stephen Bird said this year he was looking to expand his presence in the UK advisor and consumer markets. Its direct-to-consumer offering is the smallest line of business within the asset manager.
An acquisition by Abrdn comes as consolidation continues to sweep through the asset management industry, which grapples with fee pressure, an extended period of low interest rates and increasing regulation. Such a deal would void Interactive Investor’s plans for an initial public offering, which it was exploring following a boom in retail investment during the pandemic.
Interactive Investor said talks with Abrdn are ongoing, but he has been approached by other parties and an IPO remains an attractive option as well. “Discussions around the [IPO] processes are also underway, âsaid Interactive Investor.
Acquiring Interactive Investor would mark Bird’s most eye-catching move to date, which in September last year took the reins of a company that failed to deliver on promises made when it was founded. Aberdeen Asset Management’s acquisition of rival Standard Life. .
Bird has made it clear that Abrdn will continue to grow through acquisitions and also underscored its need to invest in technology to expand its digital savings and wealth offerings directly to consumers. As of June 30, Abrdn had Â£ 2.8 billion in excess regulatory capital.
In April, Standard Life Aberdeen announced it would change its name to Abrdn, as part of an effort to end several difficult years. When the merger was completed in August 2017, the newly formed group had Â£ 670 billion in assets. Since then, assets under management have declined to Â£ 465.3 billion as of June 30, as the company has suffered consecutive years of client exits. Abrdn lost its title as the UK’s largest independent asset manager to Schroders.
Interactive Investor represents about a fifth of the retail investment platform market and competes with its listed rivals Hargreaves Lansdown and AJ Bell. The group led a consolidation in the wealth management industry and in March bought a direct consumer investment platform from rival Equiniti for Â£ 48.5million.
Analysts for broker Numis said Interactive has acquired virtually all UK platforms that share its fixed-fee billing model and questioned the possibility of further growth through new transactions.
The talks, first reported by Sky News, come after Abrdn agreed last month to acquire start-up Finimize, which sends investment advice to around 1 million individual investors. In Abrdn’s half-year results, the group identified UK advisor and consumer markets as a strategic priority, alongside technology, private markets, responsible investing and growth in Asia.