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


© 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:) 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:)’s payments, bought the media company that owns Zagat and on Tuesday bought a college financial planning platform used by more than 5 million students in the United States.

Analysts and executives at JPMorgan said that the three transactions show the shape of JPMorgan’s dealmaking strategy. They are the result of JPMorgan buying a majority stake in Volkswagen (DE)’s payments business stake-volkswagens-payments biz-2021-09/08business.

“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:) bank analyst Mike Mayo.

He added, “It is another reason Goliath wins.” “They have the option to pick niche, forward-thinking fintech businesses and then scale them up across their entire global portfolio.”

Reuters has estimated that JPMorgan will have invested in 30 companies by 2021. This is based on data from Refinitiv and Dealogic, as well media reports.

Dealogic discovered that the average deal size this bank made in 2018 is smaller than it was at any time over the last decade. This includes deals where value has been disclosed. The average deal size was lower last year.

According to Dealogic, JPMorgan did more deals in 2012 than any other year. According to Dealogic, the bank did 34 acquisitions and investments in 2012. This is not counting disclosed value deals.

Chase’s corporate development leader, Leslie Wims Morris said that the bank’s franchise has the advantage of its scale. “It is less about deal volume than strategic impact. Which capabilities and which experiences are necessary?


JPMorgan is not alone in its pursuits lately. Other rivals have been purchasing companies and stakes in businesses that are based on data, algorithms, and data, or have an appeal to customers who do not already have a presence in certain markets.

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

While some deals may be large enough to justify announcing purchase prices, others are smaller and more meaningful than mega-bank mergers like those that took place in 2000 and 1990.

U.S. regulators were reluctant to approve transactions that would allow financial giants to get larger. 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.

The profitability of the business is also important. A bank’s size can affect how much capital it must have for certain assets. It makes sense, because JPMorgan has such a large market, to target businesses that can provide data or services in exchange for money, according Richard Bove, analyst at Odeon Capital Group.

According to Bove, “JPMorgan is not looking to expand its balance sheets but it wants to grow their profits.”

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:), 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.

Hesse stated to Reuters, “Just because it hasn’t been announced anything big doesn’t mean that we haven’t thought about it.” It’s simply that these items are very, very difficult to achieve.