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London-based online trading platform Freetrade told CNBC on Tuesday that it has agreed to buy the British client list of Australian investment app Stake.
The move is part of a wider effort to boost free trade at home and comes as the UK digital investment platform faces growing competition from new entrants, especially US heavyweights Robin Hood.
The startup revealed exclusively to CNBC that it struck a deal with Stake to take on all of the company’s clients and move all of the company’s assets under management in the UK onto its own platform.
Freetrade and Stake declined to disclose financial information about the deal, including the value of Stake’s UK client list.
Stake is headquartered in Sydney, Australia and was founded in 2017 by entrepreneurs Matt Leibowitz, Dan Silver and Jon Abitz to provide low-cost brokerage services to Australian retail investors.
The company also operates in New Zealand and launched services in the UK in 2020.
Following the deal, Stake UK clients will receive detailed information on how to transfer funds and other assets to Freetrade “in the coming weeks”, the companies said. Customers will still be able to use their Stake accounts until assets and cash are transferred to Freetrade in November.
Free Trade operates primarily in the UK but has sought to expand into the EU. It offers a range of investment products on its platform, including stocks, exchange-traded funds, personal savings accounts and government bonds. As of April 2024, it has more than 1.4 million users.
Earlier this year, CNBC reported that the startup’s co-founder and CEO Adam Dodds had Decided to leave the company After six years at the helm. He was succeeded by Viktor Nebehaj, the company’s then chief operating officer.
Freetrade was a beneficiary of the retail stock investing boom in 2020 and 2021, which saw GameStop and other so-called “meme stocks” surge to wild highs. Over the next few years, Freetrade and its competitors, including Robinhood, suffered from rising interest rates, which dampened investor sentiment.
In 2022, Freetrade announced plans to reduce its workforce by 15%. The following year, the company’s valuation plummeted 65% to £225 million ($301 million) in an equity crowdfunding round. Free Trade at the time attributed its decline in market value to “different market conditions.”
However, things have taken a turn for the better recently for the startup. free trade The report said the company will become profitable in the first half of 2024, with adjusted EBITDA profits reaching £91,000 in the six months to June. Revenue rose 34% year-on-year to £13.1 million.
“I am committed to building Freetrade into the UK’s market-leading commission-free investing platform,” CEO Nebehaj said in a statement shared with CNBC. “This deal demonstrates our commitment to leveraging inorganic growth opportunities to achieve that goal.”
“We have worked closely with Stake over the past few months to ensure a smooth transition and positive outcomes for their UK clients. We look forward to welcoming them and continuing to support them on their investment journey.”
Freetrade currently manages over £2 billion worth of assets for UK clients. Globally, Stake has over $2.9 billion in assets under management.
Robinhood is the larger U.S. company, with $144 billion in assets under management. Launching in the UK in November 2023 with much fanfare. Earlier this month, the company Securities lending scheme launched in UKto further attract potential British customers.
