RBS buys FreeAgent for £53m
The Royal Bank of Scotland has bought Edinburgh-based accountancy software provider FreeAgent, in a deal worth £53 million.
FreeAgent’s share price increased by more than 80% in a single day following the news.
RBS BidCo will acquire all of the issued and to-be-issued ordinary share capital, with shareholders entitled to receive 120 pence for each FreeAgent share held.
The cloud accountancy company directors have reportedly advised shareholders to accept the deal.
FreeAgent software is aimed at self-employed professionals and other micro businesses who want to manage their finances quickly and accurately. It was started in 2007 by Ed Molyneux, a former RAF fighter pilot.
“Today’s announcement represents the beginning of a new and exciting chapter for FreeAgent,” he said.
“Our vision is ‘making businesses happier and more successful by putting them in control of their finances’ and this moves us closer to that vision.”
When the company joined London’s Alternative Investment Market – a sub-market of the London Stock Exchange for smaller companies - in November 2016, it was valued at £34.1 million.
It had previously raised £1.2 million from 700 crowd funders in July 2015, making it the first UK company to launch an initial public offering after raising growth capital from crowdfunding.
Ricky Patidar, Practice Manager at CloudAccountant.co.uk said: “When FreeAgent was valued at £34 million in 2016, some people said that was as big the company was going to get. Those doubters have today been proved wrong in what is a big vote of confidence for the UK financial technology sector.”
FreeAgent will maintain its operational independence after the takeover, holding onto the same management team and working from the same Edinburgh headquarters.
RBS was already partnering with FreeAgent, allowing the banking group’s small business customers to use FreeAgent tools at no cost.
"We believe that a technology-enabled solution for our business banking customers will make it easier for our customers to build their businesses safely and securely," said RBS chief executive Ross McEwan.
RBS, which serves more than 1 million small and medium-sized businesses, has tried to repair reputational damage caused by a small business scandal in its Global Restructuring Group.