From timber to restaurant guides: JPMorgan Chase's eclectic acquisitions

September 17, 2021 1:08 PM

JPMorgan Chase is in the midst of an epic buying spree.

This year alone, the nation's largest bank by assets has completed more than 30 acquisitions in a bid to boost revenues in a low-interest rate environment, as well as to fight off growing competition from fintechs and the likes of Apple, Google and Amazon.

The flurry of deals should not come as a surprise. In December, JPMorgan CEO Jamie Dimon put out a public call for merger-and-acquisition ideas. Four months later, in his annual letter to shareholders, Dimon said that “acquisitions are in our future," pointing specifically to deals for fintech companies.

If the $3.7 trillion-asset bank cannot build certain products or services to meet client demand, or find someone with whom it can partner, it will buy what it needs, Marianne Lake, the company's co-head of consumer and community banking, told investors this week.

“That’s like the beginning and the end of it,” Lake said in remarks at an industry conference. “So we’re open-minded, and we’ll review anything we think is aligned with our strategic vision for the company and can accelerate our capabilities."

The companies that JPMorgan has acquired in recent months are diverse; they include not only fintechs but also firms with a more tenuous connection to the financial services industry.

Here’s a look at eight full or partial acquisitions that the New York megabank has announced publicly since December 2020.

A fintech specializing in tax-smart investment strategies

In December 2020, JPMorgan Asset Management announced an

agreement

to acquire 55ip, a fintech that provides automated tools to financial advisors to help them reduce investors’ tax liabilities. The deal came two months after JPMorgan and 55ip formed a

partnership

through which advisors could transition clients onto JPMorgan model portfolios using 55ip’s tax-efficient technology.

After the partnership kicked off , JPMorgan saw benefits to owning the software, Jed Laskowitz, global head of asset management solutions at JPMorgan Asset Management, told Financial Planning.

“Until this acquisition, we didn’t have our own proprietary tax management capabilities,” he said in an interview last December. “This gives us a capability to deliver our model portfolios and our asset management capabilities in a way that we [couldn’t] before.”

55ip operates as a separate entity under its own brand. The purchase price was not revealed.

A credit card rewards business

Also in December, JPMorgan Chase

scooped up

cxLoyalty, a credit card rewards business based in Stamford, Connecticut, for an undisclosed sum. The deal included cxLoyalty’s technology platform, as well as its full-service travel agency and gift card, merchandise and points-bank operations.

The addition of cxLoyalty, which came during the pandemic-induced travel slump, signaled a strategy that anticipated an eventual rebound.

“People across the globe want to vacation and travel again, and hopefully that will become a reality for many in the near future,” Lake said in a press release at the time. Acquiring cxLoyalty “will provide enhanced experiences to millions of Chase customers once they are ready, comfortable and confident to travel.”

CxLoyalty operates as a business unit of JPMorgan Chase.

A UK-based digital wealth management firm

JPMorgan’s forthcoming digital consumer bank in the United Kingdom got a boost in June when the company announced an agreement to

buy Nutmeg

, a London-based digital wealth manager that’s drawn 140,000 investors and $4.9 billion of assets under management.

In a press release announcing the deal, which is subject to regulatory approval, JPMorgan said Nutmeg would “complement the digital bank” that’s expected to launch

next week

under the Chase brand.

Historically, JPMorgan has focused its retail banking efforts solely within the United States, though the company has been offering commercial and investment banking in the U.K. for years. If the launch goes well, the company

may consider

opening digital banks in other parts of the world.

“Think of it as a long-term play,” Chairman and CEO Jamie Dimon said in June at an industry conference. “If it works, then we’ll think about other things we could do with that.”

A forest management company

Also in June, JPMorgan Asset Management said it would

acquire

a forest management and timberland investment company — part of a bid to be involved in the transition to a low-carbon economy while also offering more environmental, social and governance investment opportunities to clients.

Through the purchase of Campbell Global, JPMorgan said it expects to be “an active participant in carbon offset markets” as they come online. At the time of the announcement, Portland, Oregon-based Campbell Global managed 1.7 million acres worldwide and held $5.3 billion of assets under management.

“Investing in timberland, on behalf of institutional and high net worth individuals, will allow us to apply our expertise in managing real assets to forests, which are a natural solution to many of the world’s climate, biodiversity and social challenges,” JPMorgan Asset Management CEO George Gatch said in a press release.

A digital bank in Brazil

The United Kingdom isn’t the only overseas market on JPMorgan’s mind when it comes to retail banking.

In late June, the bank said it

would acquire

a 40% ownership stake in C6, a two-year-old digital bank in Brazil. C6 has 7 million customers and products that include multicurrency checking and savings accounts, debit and credit cards, travel and loyalty programs and lending and investments.

“We’ve admired C6 Bank, its management team and their strategy for some time,” Sanoke Viswanathan, CEO of JPMorgan’s international consumer business, said in a press release. “We look forward to supporting C6 Bank in its aspiration to be a long-term winner in the Brazilian banking market.”

The value of the deal, which is subject to regulatory approval, was not disclosed.

A fintech focused on ESG investments

JPMorgan closed June with the

acquisition of another fintech

: OpenInvest, a San Francisco startup that offers environmental, social and governance investment management products and impact reporting services that can be used by financial advisors and investors.

“Clients are increasingly focused on understanding the ESG impact of their portfolios and using that information to make investment decisions that better align with their goals,” Mary Callahan Erdoes, CEO of JPMorgan Asset & Wealth Management, said in a press release when the deal was announced.

As part of the deal, OpenInvest users will have to become JPMorgan customers to keep using the fintech's platform, OpenInvest co-founder Joshua Levin

said in June

.

OpenInvest was founded in 2015 and backed by capital from Andreessen Horowitz, Y Combinator and QED Investors. Though it will retain its own brand, it will be integrated into JPMorgan’s private bank and wealth management client offerings. Financial terms of the deal were not released.

An automaker's payments arm

In September, JPMorgan agreed to acquire a majority stake in Volkswagen Payments, a unit of the German automaker with expertise in artificial intelligence.

The allure of the partnership: an expansion of JPMorgan’s digital payment capabilities, broader access to the auto industry and the

opportunity

to charge ahead in the nascent market for in-vehicle payment systems.

JPMorgan plans to acquire a controlling interest of close to 75% of the platform, pending regulatory approval, the bank said in a press release. The deal is expected to close in the first half of 2022.

“Auto payments encapsulate many of the characteristics of the wallet of the future more generally,” Max Neukirchen, JPMorgan’s global head of merchant services, said in a press release about the deal. “Partnering with a leader in the field gives us a great opportunity to be at the heart of that.”

A restaurant-guide company

In one of its latest deals, JPMorgan said that it will

buy

The Infatuation, the restaurant-guide company that owns Zagat, the producer of annual restaurant reviews.

JPMorgan said in a September press release that the acquisition reflects the bank's aim to accelerate its "investment in dining” and also reflects JPMorgan’s “commitment to meeting customers where they are with exceptional benefits, useful content and one-of-a-kind experiences, at scale.”

The Infatuation “will retain its independent point of view and operate as a distinct brand,” JPMorgan said. The restaurant-guide company, which was founded in 2009, offers a mobile app, live dining events, a membership program and a bicoastal food festival.

“We look forward to building on our complementary missions of connecting people to experiences around a shared passion for dining,” JPMorgan’s Lake said in the release.