Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Analysis-JPMorgan's 2021 deal spree aims to fill the few holes left in its global operations

Stock MarketsSep 22, 2021 18:16
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: A woman walks past JPMorgan Chase & Co's international headquarters on Park Avenue in New York July 13, 2012. REUTERS/Andrew Burton

By Elizabeth Dilts Marshall

NEW YORK (Reuters) - JPMorgan Chase & Co (NYSE:JPM) has been on a boutique-business buying spree this year, acquiring or investing in around 30 companies since the start of 2021.

In September alone, the bank took a close-to 75% stake in Volkswagen (DE:VOWG_p)'s payments, bought the media company that owns Zagat and on Tuesday bought a college financial planning used by more than 5 million students in the United States.

Those three transactions illustrate the contours of JPMorgan's dealmaking strategy, analysts and bank executives said: the largest U.S. bank is filling the few holes left in its offerings, without facing regulatory hurdles that would almost surely accompany larger transactions.

"These are acquisitions that are bite-sized and span a full range from payments to big data, have applications for AI and (provide) premium customer experiences," said Wells Fargo (NYSE:WFC) bank analyst Mike Mayo.

"It's another reason Goliath is winning," he added. "They can go ahead and pick off forward-looking, niche fintech firms and scale them across their global franchise."

While most deals and their terms are not public information, Reuters estimates JPMorgan has bought and invested in around 30 companies in 2021, according to data from Refinitiv, Dealogic and media reports.

The average size of the deals the bank has done this year are smaller than at almost any point in the past decade, Dealogic found, counting only deals where the value was disclosed. Average deal size last year was smaller.

Only in 2012 did JPMorgan do more deals, according to Dealogic. The bank made 34 investments and acquisitions that year, again counting only those deals with disclosed values.

"The benefit of our franchise is our scale," said Leslie Wims Morris, who heads corporate development for Chase. "It's less about deal size than it is about strategic impact: what capabilities do we need, and what experiences do we want to deliver?"


JPMorgan is not alone in its pursuits lately. Rivals have also been buying companies or stakes in companies that thrive on algorithms, apps, data and a specific appeal to desirable customers in markets where they do not have a foothold.

For instance, Goldman Sachs Group Inc (NYSE:GS) last week purchased home-improvement lender for $2.2 billion, and on Tuesday Wells Fargo & Co and Mastercard (NYSE:MA) Inc participated in a $60 million funding round for Bilt Rewards, a credit-card loyalty startup that targets renters.

Although some of the deals are sizable enough to warrant announcing the purchase price, they are generally smaller and less meaningful than the mega-bank mergers that happened in the 1990s and 2000s.

U.S. regulators have been loath to approve transactions that help the biggest financial firms get bigger. That is especially true under the Biden administration, which has a stated policy of cracking down on anticompetitive practices and whose Justice Department effectively quashed a merger between two large insurance brokers in July.

There is also an issue of profitability relative to size. The larger U.S. banks become, the more capital they must hold against certain assets. Because JPMorgan is so large, it makes sense to target companies that provide services for fees or can offer data about customer preferences, said Odeon Capital Group analyst Richard Bove.

"JPMorgan does not want to grow its balance sheet, but it does want to grow its profits," he said.

That dynamic, combined with JPMorgan's saturation across the United States, explains its 75% stake in Volkswagen Payments SA; its acquisition of UK digital wealth manager Nutmeg ; and a 40% stake in C6 Bank, a popular digital lender in Brazil, he said.

Investing internationally also gives JPMorgan an edge over domestic competitors like Citigroup Inc (NYSE:C), which has exited large chunks of its global consumer operations, analysts said.

JPMorgan is considering large deals too, but some of the transactions this year simply came together faster, said Ben Hesse, head of the bank's strategy & business development for asset & wealth management unit.

His division oversaw recent purchases of ESG-focused fintech startup OpenInvest, forest manager and timberlands investor Campbell Global LLC and a minority stake in Kraft Analytics Group, the sports-focused data analytics firm.

"Just because we haven't announced anything large doesn't mean we haven't looked at it," Hesse told Reuters. "It's just that the bar for these things is very, very high."

Analysis-JPMorgan's 2021 deal spree aims to fill the few holes left in its global operations

Related Articles

UK payment company Wise says Q2 revenue up 25%
UK payment company Wise says Q2 revenue up 25% By Reuters - Oct 19, 2021

LONDON (Reuters) - Money transfer company Wise Plc said on Tuesday that its revenue was 132.8 million pounds ($182.97 million) in the second quarter, a rise of 25% from the same...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email