The Royal Bank of Scotland (RBS) has struck a £53m deal to buy an AIM-listed software company in an effort to beef up its digital offering.
Edinburgh-based FreeAgent provides cloud-based, software-as-a-service (SaaS) accounting software solutions designed specifically for UK micro-businesses and their accountants.
The company’s product streamlines financial management, bringing together a range of functionality from invoice and expense management to VAT and payroll.
In a statement issued on the London Stock Exchange, RBS said the acquisition would allow it to further develop its customer facing channels with an enhanced digital offering.
The bank added that FreeAgent will be operated as an independent member of the RBS Banking group and that the firm’s existing management team would remain.
The bank will offer the firm’s capabilities to its existing and new business banking customers.
FreeAgent chief executive Ed Molyneux described the acquisition as “the beginning of a new and exciting chapter” for the business.
“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,” he said.
“Having developed a strong strategic partnership with RBS and with over 10,000 of their business banking customers having already signed up to use FreeAgent’s accounting solution, we look ahead to the next chapter, where we will accelerate and further extend our technology capabilities as part of a bigger group.
“Our working together represents a really compelling opportunity and hence the Board is intending to recommend the offer which we believe makes both good strategic and financial sense.”
Ross McEwan, CEO of RBS, added: “RBS is pleased to have reached an agreement on a recommended acquisition of FreeAgent. 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.
“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.”
This is RBS’s first acquisition since the state-backed lender was bailed out during the financial crisis.
The deal is expected to complete in the second quarter of 2018, subject to approval.