JPMorgan (JPM) Signs Deal to Acquire Fintech Start-up 55ip
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JPMorgan’s JPM asset management division — J.P. Morgan Asset Management — has signed an agreement to acquire Boston-based Fintech start-up, 55ip. The start-up helps financial advisors automate the creation of tax-efficient investment strategies.
The financial terms of the deal were not revealed.
Notably, up on closure, 55ip will continue to operate as a separate entity, under its own brand name. The firm, which has been operating since 2015, remains “committed to serving its existing clients and enterprise partners.”
55ip’s ActiveTax Technology, which comprises tax-smart transitions, management and withdrawals, is the main attraction for advisors. The firm also “helps advisors deliver ongoing tax-smart trading and tax benefit reporting to clients.”
George Gatch, CEO of J.P. Morgan asset management, said “Advisors are increasingly seeking intelligent, automated tools to provide simplicity, scale and efficiency, and by acquiring 55ip we are accelerating our significant investments in advanced advisor technology.”
Dr. Vinay Nair, founder and executive chairman of 55ip, stated “Tax-related savings are first order, especially in a world with lower rates, lower returns and higher taxes. We are delighted that J.P. Morgan shares our vision to democratize sophisticated tax management.” He will continue work as a consultant and special advisor to JPMorgan’s asset management unit.
Earlier in October, JPMorgan and 55ip had announced a partnership agreement, under which advisors are able to shift holdings into portfolios while minimizing the amount of taxes due.
With banks increasingly seeking technological advancements to better serve their clients, the deal is expected to further support JPMorgan.
Shares of JPMorgan have rallied 14.7% over the past six months, outperforming the industry’s growth of 7.2%.
Currently, JPMorgan carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Firms Making Similar Efforts
With coronavirus pandemic hurting businesses and demand for technology-driven processed rising, several financial firms are expanding inorganically or have plans to do so. Earlier this week, Blackstone BX announced an agreement to buy San Francisco-based DCI, an investment management firm that uses “a proprietary, fundamental-based, technology-driven model to deliver differentiated returns to clients.”
Earlier in November, with an aim to enhance and expand the merchant payment business and accelerate growth plans in Europe, Banco Santander, S.A. SAN announced a deal to acquire several highly specialized technological assets from Wirecard. Further, Llyods Banking Group LYG has shown interest in buying Britain-based online-only bank, Starling Bank Ltd.
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