Freeagent targets growth after £53m acquisition by RBS
● Molyneux says deal is ‘an exciting day’ ● Bank’s first purchase since ABN Amro
Edinburgh-based accounting software specialist Freeagent has been bought by a subsidiary of Royal Bank of Scotland in a £53 million deal that will provide a windfall for the fintech’s founder, Ed Molyneux.
It marks the bailed-out lender’s first acquisition since its controversial crisis-era £49 billion deal to buy ABN Amro, and also comes less than two years after Freeagent listed on London’s Alternative Investment Market (Aim).
Under the terms of the transaction, RBS Bidco will acquire the entire issued and to be issued ordinary share capital of Freeagent, and shareholders will be entitled to receive 120p in cash for each Freeagent share held.
Freeagent chief executive Molyneux told The Scotsman: “It’s a very exciting day for us." He said the main reason for this is the opportunity the business sees in accessing RBS customers, adding that Freeagent's headcount is to rise rather than undergo any cutbacks as a result of the deal.
The two firms already have a commercial partnership, and Molyneux said: “[RBS] already have the best part of a million SMES that they provide banking services for, and so we’ve already seen some success in rolling out Freeagent to those customers.
“We’ve got more than 10,000 signed up now and we’re just looking forward to growing that very significantly."
His own stake sits at 8.9 per cent, which equates to a £4.7m windfall as a consequence of the takeover.
The bank intends to continue to use the Freeagent brand in tandem with those of Royal Bank of Scotland and Natwest, and operate the fintech as an independent part of the RBS Group, retaining Freeagent’s existing management team and maintaining its current Edinburgh location.
“Ultimately what we’re trying to do as a business is have a lot of impact, do a lot of good in the world and [the deal] just broadens out our reach into a much bigger customer base," Molyneux said. "The broader our reach, in a way, the closer we are to achieving our vision for the business.”
The former RAF fighter pilot launched the firm in 2007, and it is aimed at UK microbusinesses (defined as sole traders and companies with fewer than ten employees) and their accountants. It joined Aim in November 2016.
Molyneux said the target is for it to stay as autonomous as possible, while he aims to keep leading the firm “for the foreseeable future”. As for teaming up with RBS – which has a recent chequered history of dealing with SMES – he said: “We think more about what the future holds for us as a shared organisation rather than looking back.”
Ross Mcewan, chief executive of RBS, said the group is pleased to have reached an agreement on a recommended acquisition of Freeagent.
He said: “Since the beginning of our partnership, we have been impressed by Freeagent and its technology, and are excited by the enhanced offering we will be able to provide to our customers.”