JPMorgan is to acquire digital wealth manager Nutmeg as part of plans to launch a challenger bank brand in the UK later this year.
The Wall Street lender said the Nutmeg purchase would complement its digital strategy under the Chase brand, which will include the launch of a consumer-focused bank to rival the likes of Monzo and Starling Bank.
The deal is subject to regulatory approval but is expected to close in the second half of this year. A source familiar with the matter told Financial News that the deal was worth less than £1bn.
JPMorgan said it has yet to make a decision on whether to retain Nutmeg’s branding as part of the merger, and intends to “conduct detailed research and take a considered decision on brand choice over time”.
Nutmeg has more than 140,000 investors and £3.5bn in assets under management, having first launched in 2012.
The bank said the digital manager, which also offers financial advice, had recorded a 70% year-on-year growth in assets across products including ISAs, pensions and general investments.
JPMorgan had already been in partnership with Nutmeg prior to the acquisition, powering several of its portfolios including actively and passively managed exchange-traded funds.
“We are building Chase in the UK from scratch using the very latest technology and putting the customer’s experience at the heart of our offering, principles that Nutmeg shares with us,” said Sanoke Viswanathan, chief executive of international consumer at JPMorgan.
“We look forward to positioning their award winning products alongside our own, and continuing to support their innovative work in retail wealth management.”
Nutmeg’s investors included Ion Pacific, Goldman Sachs’ growth arm, Hong Kong investor Convoy and Balderton Capital. Its last public funding round from venture capital firms in January 2019 valued the business at £245m.
Data provided by financial consultancy The Lang Cat showed Nutmeg made a loss of £21.2m in 2019, up from £18.6m a year earlier as it built on years of cumulative losses since its founding.
The robo adviser has also seen turnover at the senior level in recent years, as the likes of founder Nick Hungerford, chief investment officer Shaun Port, and chief executive Martin Stead all left the business. Most recently, Nutmeg’s head of financial advice Lisa Caplan also left the business last year.
Neil Alexander, chief executive of Nutmeg, and the firm’s executive team will continue to run the business and work alongside Chase in the UK, JPMorgan said.
“Nutmeg’s customers can expect the same level of transparency, convenience and service that helped make us a leading digital wealth manager in the UK,” Alexander said in a 17 June statement on the acquisition.
“I am truly impressed with the digital experience that Chase is building for the UK, and this new chapter in our story will see Nutmeg’s customers benefit from a wider range of products and services in the future, and allow us to expand into new markets.”
The Chase brand is currently being piloted in an internal testing phase in the UK prior to public release, with plans to launch with an initial offering of current accounts. JPMorgan’s Chase brand in the US has more than 56 million active customers.
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