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London-based online trading platform Freetrade told CNBC on Tuesday that it has agreed to buy the British customer book of Stake, an Australian investment app.
The move is part of a wider bid by Freetrade to strengthen its domestic operations and comes as UK digital investment platforms face increasing competition from new entrants – not least US heavyweights. Robinhood.
The startup told CNBC exclusively that it had entered into a transaction with Stake to acquire all of the company's customers and move all of the assets it manages in Britain to its own platform.
Freetrade and Stake declined to disclose financial information about the deal, including the value of Stake's UK customer base.
Based in Sydney, Australia, Stake was founded in 2017 by entrepreneurs Matt Leibowitz, Dan Silver and Jon Abitz with the aim of offering low-cost brokerage services to retail investors in Australia.
The company, which also operates in New Zealand, launched its services in the United Kingdom in 2020. However, following a recent business review, Stake decided to focus primarily on its operations in Australia and New Zealand.
Following the deal, Stake UK customers will be contacted in the coming weeks with details of how to transfer their money and other assets to Freetrade, the companies said. Customers can still use their Stake account until assets and cash are transferred to Freetrade in November.
Freetrade operates mainly in Britain, but has attempted 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 co-founder and CEO Adam Dodds had decided to leave the company after six years at the helm. He was replaced by Viktor Nebehaj, the company's then chief operating officer.
Freetrade benefited from the retail stock investing frenzy in 2020 and 2021, with GameStop and other so-called “meme stocks” jumping to wild highs. In the years that followed, Freetrade and its rivals, including Robinhood, were impacted by higher interest rates, which sapped investor sentiment.
In 2022, Freetrade announced plans to lay off 15% of its workforce. The following year, the company saw its valuation fall 65% to £225 million ($301 million) in an equity crowdfunding round. At the time, Freetrade blamed a “different market environment” for the decline in market value.
More recently, however, things have been changing for the startup. Freetrade reported its first ever half-year profit in 2024, with adjusted earnings before interest, tax, depreciation and amortization in the six months to June reaching £91,000. Revenues rose 34% year-on-year to £13.1 million.
“I am focused on scaling Freetrade into the leading commission-free investment platform in the UK market,” CEO Nebehaj said in a statement shared with CNBC. “This deal demonstrates our commitment to seizing inorganic growth opportunities to achieve that goal.”
“Over the past few months we have worked closely with Stake to ensure a smooth transition and good outcomes for their UK clients. We look forward to welcoming them and continuing to support them throughout their investment journey.”
Freetrade currently manages over £2 billion of assets for UK clients. Globally, Stake has more than $2.9 billion in assets under management.
Robinhood, a much bigger player in the US with $144 billion in assets under management, launched in Britain in November 2023 to much fanfare. Earlier this month, the company launched a securities lending program in Britain in an effort to further entice potential British customers.
