Sign for JP Morgan on March 7th, 2020 in London, UK. JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company based in New York.
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LONDON – JPMorgan Chase said Thursday it had agreed to buy UK online investment management platform Nutmeg for an undisclosed amount.
The US banking giant said the deal, pending regulatory approval, would complement its plans to launch a standalone digital banking brand in the UK later this year.
With more than £ 3.5 billion ($ 4.9 billion) in assets under management, Nutmeg is one of the UK’s largest robo-advisors. The company offers a range of investment accounts including ISAs, annuities, and general investment accounts. Rivals include Wealthsimple, Moneyfarm and Moneybox.
Jamie Dimon, CEO of JPMorgan, said last year that he would be “much more aggressive” in finding acquisitions to help the largest US asset class bank expand its capabilities. He may have been motivated by the deals rival Morgan Stanley has made in recent years – he spent $ 20 billion to acquire E-Trade and Eaton Vance.
Dimon has also spoken about protecting JPMorgan against fintech players like PayPal and big tech firms like Alphabet.
Taking a digital-first approach in the UK allows the bank to expand outside of the US, where it has an extensive network of physical branches and leadership positions in retail and institutional businesses. These efforts could eventually be applied beyond the UK, the bank said earlier.
“We are building Chase in the UK from the ground up with the latest technology and putting the customer experience at the heart of our offering, principles that Nutmeg shares with us,” said Sanoke Viswanathan, CEO International Consumer at JPMorgan, in the statement.
“We look forward to placing their award-winning products alongside our own and continuing to support their innovative work in retail wealth management.”
The deal comes months after the two companies announced a partnership that will allow the fintech company to offer ETFs created with the help of JPMorgan, the largest U.S. bank by assets.
This isn’t the first time JPMorgan has bought a fintech company after initially partnering. In December, JPMorgan announced it was acquiring 55ip, a Boston-based startup that helps financial advisors automate the process of building tax-efficient portfolios.
Nutmeg CEO Neil Alexander said clients should “expect the same level of transparency, convenience and service that has made us a leading digital asset manager in the UK”.
The UK is home to an increasingly crowded retail banking market, with challengers like Revolut, Monzo and Starling gaining a following thanks to their all-digital checking accounts. The UK fintech market is one of the largest in the world, according to industry association Innovate Finance, and last year attracted $ 4.1 billion in venture capital financing.
Instead of relying on investment technology already developed in the USA, the bank decided to buy the ten-year-old start-up. That’s because the UK and Europe have different regulatory requirements, the companies said. JPMorgan’s US-based automated investment service You Invest has raised approximately $ 50 billion in net worth, Dimon announced this week.
JPMorgan Securities acted as financial advisor to JPMorgan on the transaction, while Freshfields Bruckhaus Deringer acted as legal advisor. Nutmeg was advised by Arma Partners as financial advisor and Taylor Wessing as legal advisor.
Prior to the acquisition agreement, Nutmeg had raised more than $ 150 million from investors including Goldman Sachs and UK venture capital company Balderton Capital.