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London-based online trading platform Freetrade told CNBC on Tuesday that it has agreed to buy the UK client book of Stake, an Australian investment app.
The move is part of a wider bid by Freetrade to strengthen its domestic business and comes as Britain’s digital investment platforms face growing competition from new entrants – not least the US heavyweight. Robinhood.
The startup told CNBC exclusively to go into business with Stake to take over all of the company’s clients and move all of the company’s assets in the UK to its premises.
Freetrade and Stake declined to disclose financial details of the deal, including the value of Stake’s UK customer book.
Stake, based in Sydney, Australia, was founded in 2017 by entrepreneurs Matt Leibowitz, Dan Silver and Jon Abitz with the goal of providing low-cost brokerage services to retail investors in Australia.
The company, which also operates in New Zealand, is launching its services in the UK in 2020. However, after a recent business review, Stake decided to focus mainly on its Australian and New Zealand operations.
Following the deal, Stake UK customers will be contacted with details on how to move their money and other assets to Freetrade “in the coming weeks”, the companies said. Customers will still be able to use their Stake account until assets and funds are transferred to Freetrade in November.
Freetrade operates mainly in the UK but wants to expand into the European Union. It offers a range of investment products on its platform, including stocks, exchange-traded funds, individual savings accounts, and government bonds. As of April 2024, it had over 1.4 million users.
Earlier this year, CNBC reported that the startup’s founder and CEO, Adam Dodds, has decided to leave the company after six years at the helm. He was replaced by Viktor Nebehaj, who was the firm’s CEO at the time.
Freetrade benefited from the stock market boom of 2020 and 2021, which saw GameStop and other so-called “meme stocks” jump higher. In the following years, Freetrade and its competitors, including Robinhood were affected by high interest rates that boosted investor sentiment.
By 2022, Freetrade announced plans to lay off 15% of its workforce. The following year, the company saw its value drop 65% to £225 million ($301 million) in a crowdfunding round. Freetrade at the time blamed a “different market environment” for the decline in its market value.
Recently, however, things have been changing to boot. Freetrade reported its first half-year profit in 2024, with adjusted earnings before interest, tax, depreciation and amortization of £91,000 in the six months to June. Revenue rose 34% year-on-year, to £13.1 million.
“I am focused on growing Freetrade into a commission-free investment platform in the UK market,” CEO Nebehaj said in a statement shared with CNBC. “This agreement demonstrates our commitment to leveraging inorganic growth opportunities to achieve that goal.”
“Over the past few months, we have worked closely with Stake 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 more than $2.9 billion in assets under management.
Robinhood, the largest player in the US with assets of $144 billion under management, was launched in the UK in November 2023 with great popularity. Earlier this month, the company launched a securities lending program in the UK, in a bid to further attract British customers.