JPMorgan Chase is to buy digital wealth manager Nutmeg to bolster the forthcoming launch of its digital bank in the UK later this year.
In a blog post, Nutmeg CEO Neil Alexander says Nutmeg will form the bedrock of the bank’s retail digital wealth management offering internationally over the long term, complementing the launch of Chase as a digital bank in the UK later this year.
Financial details were not disclosed, but City sources quote a figure close to £700 million was shelled out by JPMorgan. That represent a big windfall for the 2,100 customers who backed a crowdfunding round two years ago. That was priced at £12.82 per share but the US bank is paying two and half times that at around £30-32 per share.
Founded a decade ago, Nutmeg currently counts more than 140,000 clients and over £3.5bn of AUM. In its most recent set of full accounts for 2019, the firm posted a pretax loss of £22 million.
Nonetheless, Nutmeg has enjoyed record growth over the past year as the pandemic slowed down spending and left people with more disposable income to invest. Nutmeg's automated risk-weighted investment portfolios come in multiple formats, including ISA, Junior ISAs, Lifetime ISAs, pensions and general investment accounts.
Says Alexander: "The products and services our customers currently enjoy from Nutmeg will be unaffected and, as the deal completes later in the year after approvals are received, JPMorgan Chase and Nutmeg will be working closely on further developing our offering to the benefit of our investors."
Commenting on the acquisition, Sanoke Viswanathan, CEO of international consumer at JPMorgan Chase, comments: “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. We look forward to positioning their award-winning products alongside our own and continuing to support their innovative work in retail wealth management.”
JPMorgan intends to offer a range of products, launching at first with a new take on current accounts. The offering is currently being piloted in an internal testing phase, prior to public release.
The move marks the beginning of a battle between US heavyweights on British turf. Goldman Sachs is also gearing up to launch its own robo-advisory service for UK retail unit Marcus later this year.