JP Morgan this week concluded months of searching the market with a deal to buy Nutmeg, the online w19 Jun 2021 09:08
JP Morgan this week concluded months of searching the market with a deal to buy Nutmeg, the online wealth manager, before the launch of its digital bank in the UK in the autumn.
The £700 million purchase marks the first substantial acquisition by a traditional bank of a British fintech and is expected to be the first of many — although at what price is uncertain. Buyers are weighing up the lasting benefits of mergers in this relatively untested sector, and asking whether theoretical prices derived from funding rounds can be justified to buy entire businesses.
For founders, it is a question of whether to cash out via a deep-pocketed buyer, as Nutmeg has with JP Morgan, against the potential glory of creating the next Stripe — the privately owned payments business valued in March at $95 billion — or a stock market listing.
According to Tom Merry, managing director for banking strategy at Accenture, 2021 is set to be a “banner year” for fintechs. “New ways of spending and working have seen many UK fintechs become integral to helping organisations meet shifting consumer and business demands,” he said. “This has boosted investor confidence — and investment levels reflect this.”
Data, processing and payments specialists are likely to be highly attractive to big banks, as are firms whose tech allows them to lend to areas outside the mainstream. This week ThinCats, which extends credit to non-standard businesses, raised £160 million. Other potential buyers include deep-pocketed investors organised into special purpose acquisition companies (Spacs).
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