JP Morgan has struck a deal worth about £700 million to buy Nutmeg, the digital wealth manager, as America’s biggest bank seeks to kickstart plans to build a consumer business in Britain.
The surprise move by the Wall Street financial services group comes before the launch of its long-awaited online retail bank in the UK this year. Nutmeg will sit alongside the new digital bank, which will start off by offering a current account to customers accessible through a smartphone app in the autumn.
The deal will bring Nutmeg’s customer base of 140,000 investors, and more than £3.5 billion in assets under management, into the New York-based JP Morgan.
The investment platform is a so-called “robo-adviser” that has grown since its was founded in 2012 into one of Britain’s largest digital wealth managers. It is one of a new generation of businesses that offer automated services and ready-made portfolios to help consumers to invest.
Yet despite strong growth in assets and customer numbers, the business has never made a profit.
Its latest accounts filed at Companies House show that Nutmeg’s pre-tax losses widened to £22.3 million in 2019 from £18.6 million a year earlier, even though revenues increased to £9.3 million from £7.2 million. Click & Invest, a competing robo-adviser service from Investec, the bank, closed in 2019 after making losses of £32 million.
Nutmeg’s backers include Goldman Sachs, a main rival of JP Morgan, and Schroders, the British fund management group, which each own stakes of about 10 per cent. Other shareholders include Balderton Capital, while Lord Spencer of Alresford, who made a fortune from Icap, the interdealer broker, and Sir Charles Dunstone, the tycoon who co-founded Carphone Warehouse, bought into the business in 2014.
Nutmeg has also in the past raised money from private investors through Crowdcube, the crowdfunding platform.
Neil Alexander, Nutmeg’s current chief executive, will continue to run the business after its takeover by JP Morgan.
The American group has no current plans to scrap the Nutmeg name, which will remain separate for the time being from its new online banking service, which will operate under its Chase consumer brand. Nutmeg products will not be available through the Chase app initially.
JP Morgan had long been rumoured to be planning a retail bank in Britain and finally confirmed its plans in January. It will compete with the likes of Monzo and Starling, as well as Goldman, which started its Marcus savings account business in the UK in 2018.
Sanoke Viswanathan, head of JP Morgan’s international consumer division, said: “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.”
Alexander 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.”
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JP Morgan buys Nutmeg to join Chase digital bank in Britain