The U.S. banking giant said the deal, which is still subject to regulatory approval, would complement its plans to launch a standalone digital banking brand in the UK later this year.
With over £ 3.5 billion ($ 4.9 billion) in assets under management, Nutmeg is one of the UK’s largest robo-advisers. The company offers a range of investment accounts, including ISA accounts, pensions, and general investment accounts. Rivals include Wealthsimple, Moneyfarm, and Moneybox.
JPMorgan CEO Jamie Dimon said last year he would be “much more aggressive” in seeking acquisitions to help America’s largest bank in terms of assets add capacity. He may have been motivated by deals made by rival Morgan Stanley in recent years – spending $ 20 billion to take over E-Trade and Eaton Vance.
Dimon also spoke about bringing JPMorgan against two fintech players like PayPal and big tech companies including Alphabet.
By launching a digitally-focused effort in the UK, the bank can grow outside the US, where it has an extensive network of physical branches and leading positions in retail and institutional businesses. These efforts could potentially be applied beyond the UK, the bank said previously.
“We are building Chase in the UK from the ground up using the very latest technology and placing the customer experience at the heart of our offering, principles that Nutmeg shares with us,” said Sanoke Viswanathan, CEO of Consumer Affairs. international at JPMorgan, in the press release.
“We look forward to positioning 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 allowed the fintech firm to offer ETFs created with the help of JPMorgan, the largest US bank by assets.
This isn’t the first time that JPMorgan has bought a fintech company after initially partnering with it. In December, JPMorgan announced the acquisition of 55ip, a Boston-based startup that helps financial advisors automate building tax-efficient portfolios.
Nutmeg CEO Neil Alexander said clients should “expect the same level of transparency, convenience and service that has helped make us a leading digital wealth manager in the UK”.
Britain is home to an increasingly crowded retail banking market, with challengers like Revolut, Monzo and Starling growing in popularity with their digital-only checking accounts. The UK fintech market is considered one of the largest in the world, attracting $ 4.1 billion in venture capital funding last year, according to industry body Innovate Finance.
Instead of using investment technology already developed in the United States, the bank opted instead to buy the 10-year-old start-up. That’s because the UK and Europe have different regulatory requirements, the companies said. JPMorgan’s U.S.-based automated investment service You Invest has raised around $ 50 billion in assets, Dimon revealed this week.
JPMorgan Securities acted as financial advisor to JPMorgan for 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 buyout deal, Nutmeg had raised a total of more than $ 150 million from investors, including Goldman Sachs and UK venture capital firm Balderton Capital.