Two of the largest equity crowdfunding platforms in the UK have abandoned plans to merge after a regulator raised major competition concerns, it has been revealed.
Crowdcube announced the proposed acquisition of Seedrs in October last year, which would have led to the creation of the “world’s largest private equity marketplace”.
But following an investigation by the Competition and Markets Authority (CMA), the deal has now been called off.
Publishing the outcome of the review in March, the CMA concluded that the proposed merger between Crowdcube and Seedrs – who already closely compete with one another – would “reduce competition and innovation”.
It was found that the deal would result in the combined company having at least a 90 per cent share of the UK equity crowdfunding market – significantly limiting choice for a large number of small and medium-sized enterprises who view equity crowdfunding as their “only way to secure financial backing”.
Accepting the outcome of the investigation, both parties jointly agreed to withdraw from the transaction.
“The CMA has now shared its provisional findings and disappointingly raised concerns about competition and concluded that blocking the transaction may be the only way of addressing these concerns,” said Darren Westlake, Founder & CEO of Crowdcube.
“We’re obviously disappointed with the CMA’s findings but we have taken the decision to terminate the proposed acquisition. However, I’d like to reassure you that it’s business as usual at Crowdcube, and we continue to focus on delivering a great experience for businesses and investors alike.”
Equity crowdfunding platforms, such as Crowdcube and Seedrs, connect new and innovative firms with thousands of smaller investors to raise finance.
According to the latest statistics, these two platforms alone have helped raise over £2 billion for start-ups including BrewDog, Revolut, and Perkbox.
For commercial support, including advice on mergers, acquisitions, investment, and corporate finance, please get in touch with our expert team today.
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