JPMorgan Chase (NYSE: JPM), America’s largest bank by assets, went on an absolute shopping spree in June, announcing four acquisitions, mostly of fintech and digital banking companies. It also announced another fintech acquisition in December of last year, giving the bank five purchases in a seven-month period. JPMorgan’s CEO Jamie Dimon has been pretty vocal about his desire to purchase more companies in the asset management space, which many believe is ripe for consolidation, as well bolt-on fintech acquisitions. Here are the five acquisitions JPMorgan made and how they can help the company grow and better compete.
1. Nutmeg Saving and Investment Limited
Several months after confirming that it would launch a digital consumer bank in the United Kingdom, JPMorgan announced that it plans to purchase the popular U.K. robo advisor Nutmeg Saving and Investment Limited. Nutmeg provides individual savings accounts (ISAs), junior ISAs, lifetime ISAs, pensions, and general investment accounts. Nutmeg has nearly $4.9 billion in assets under management and 140,000 customers.
JPMorgan has made it pretty clear that it is interested in growing its consumer franchise, whether in the U.S. or globally. Acquiring Nutmeg right around the time it is launching in the United Kingdom is no mere coincidence. The customers here provide a good start as JPMorgan plots its consumer banking foray into the U.K., and gives it the potential to cross-sell other consumer banking products to Nutmeg customers.
Nutmeg is a popular brand in the UK, so it will likely stay intact for now. However, if Chase’s consumer digital bank is successful, the Nutmeg business may soon be folded into JPMorgan over time.
2. C6 Bank
The Brazilian banking market has clearly caught the eye of U.S. investors. Early in June, the legendary investor Warren Buffett and his company Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) invested $500 million in the privately held parent company of NuBank, a digital bank in Brazil that has 40 million customers.
In late June, JPMorgan followed suit, acquiring a 40% stake in the Brazilian digital bank C6, which has 7 million customers and offers multi-currency checking and savings accounts, debit and credit cards, travel and loyalty programs, individual investment and personal lending products, and banking and payments products for small businesses.
As can be seen in the U.K. and Brazil, JPMorgan seems to like the idea of growing its consumer bank digitally, as opposed to taking a real estate-heavy approach in foreign markets and opening up lots of brick-and-mortar branches. The bank also appears open to acquiring existing customer bases as well instead of building everything from scratch, although in the U.K. it seems to be taking a hybrid approach.
JPMorgan Chase reached into the start-up world in San Francisco to purchase OpenInvest, a platform that helps financial advisors customize investments in the environmental, social, and governance (ESG) space. ESG funds took in $21 billion in inflows in the first quarter of the year, and could become a $1 trillion category by 2030, which is why traditional banks are looking to grow in the sector and offer their clients better access.The Andreessen Horowitz-backed OpenInvest will retain its brand and be folded under JPMorgan’s private bank and wealth management division.
JPMorgan’s asset and wealth management division had $2.8 trillion in assets under management at the end of the first quarter and $3.8 trillion in total client assets. The acquisition should help the bank further grow this division and reach more ESG customers.
4. Campbell Global
JPMorgan continued its ESG push when it announced the acquisition of Campbell Global, a forest and timberland management investing company. Campbell has $5.3 billion in assets under management and manages 1.7 million acres worldwide. The move is part of JPMorgan’s efforts to help its clients participate in the active carbon offset markets.
“This acquisition expands our alternatives offering and demonstrates our desire to integrate sustainability into our business in a way that is meaningful,” George Gatch, CEO of J.P. Morgan Asset Management, said in a statement. “Investing in timberland, on behalf of institutional and high net worth individuals, will allow us to apply our expertise in managing real assets to forests, which are a natural solution to many of the world’s climate, biodiversity and social challenges.”
In December 2020, JPMorgan launched its buying spree with the announcement that it would acquire the Boston-based 55ip, a platform that helps financial advisors create tax-smart investment strategies for clients. There are a lot of ways to interact with clients and give them a reason to do business with you, and helping them save more on taxes when they invest is a way to stand out among the crowd.
“The way we think about digitization is in a more holistic fashion, whether it’s the onboarding of clients, whether it’s the connectivity with clients, whether it’s the transaction management with clients, or even the servicing piece,” Sridhar Kanthadai, head of wholesale payments at J.P. Morgan Asset Management, told the publication PYMNTS right around the acquisition.
View more information: https://www.fool.com/investing/2021/07/14/5-acquisitions-jpmorgan-chase-grow-compete/