Updated: Mar 28
Source: Global Shares
In a bid to remain competitive, the bank is acquiring Global Shares for at least €450 million, an Irish software firm founded in 2005 now with almost $200 billion in assets. Global Shares manages employee shares for some of the world’s biggest companies, providing corporations with support from over 550 equity experts and an award-winning software platform. According to the company’s LinkedIn, it helps with administration, global custody, financial reporting, compliance and more.
Now the world’s 6th largest financial institution, JPMorgan Chase counts $3.386 trillion in assets, a 26% yearly increase between 2019 and 2020. It has since taken over the UK.-based HSBC Holdings PLC as well as French BNP Paribas.
Last year, JPMorgan got regulatory approval from Beijing to become the first foreign owner of a brokerage in China, as part of its expansion strategy in the country. Foreign financial groups have historically expanded into China through partnerships in areas such as securities, futures and asset management. Due to recent government reforms, they can now apply for full ownership of such businesses.
During 2021, JPMorgan Chase made more than 30 acquisitions, putting the bank on track for its buying spree of the last few years. JPMorgan Chase made acquisitions and investments in other companies, mostly of smaller groups ranging from an online money manager in Britain to a Brazilian digital bank, are a sign that the bank is turning to deals to expand their banking reach.
A number of acquisitions includes, notably OpenInvest, the leading FinTech company that helps financial professionals to customise their reports based on investments. Nutmeg, a UK-based robo-advisor company, which had previously partnered with the bank in 2020 to launch a range of EFTS as part of the Smart Alpha portfolio. The sale in June 2021 cost around €819 million according to Reuters.
JPMorgan Chase also purchased a 40% stake of C6 Bank, a Neo-bank in Brazil, for more than $1 billion. The group’s investments, including those not mentioned here, span a variety of different sectors such as Payments, Investment Tech, Food Tech and more. Outside of the banking industry, it purchased Campbell Global, suggesting that it is also looking to broaden its reach when it comes to environmental and social investing. In addition to this we count The Infatuation, a restaurant website, who’s partnership will add reservations and events to what Chase can offer to customers in terms of credit card perks.
Over 2021, JPMorgan Chase has either invested in or acquired around 30 companies. With the exception of Campbell Global, cxLoyalty and Frosch, the average age of the acquired companies on the graph is just over 7 years at the time of writing this article.
According to Odeon Capital Group analyst Richard Bove, the bank seeks to acquire companies which have established sources of income, by charging fees for their services, and a wealth of customer data. The startups have already proven their potential for success, and provide the bank with forms of capital that allow it to remain competitive vis à vis new fintechs.
The known deals have been modest in size, as the bank giant acquires startups in a range of niche sectors. This approach is advantageous to the group, as it reduces criticism from regulators, particularly those under the Biden administration, which target anti-competitive behaviour that often comes from big corporate mergers.
For JPMorgan Chase, a bank that wishes to increase its profitability rather than grow its balance sheet, startup acquisitions are a perfect compromise in light of the restrictions concerning its acquisitions of very large firms.
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