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Nutmeg, a UK-based digital wealth manager, has secured £ 45 million ($ 58.4 million) worth of investors, including Goldman Sachs, according to the Financial Times.
Goldman Sachs' main strategic investment arm (PSI) co-led the discussion with Hong Kong-based financial advisory group Convoy, which invested £ 24 million ($ 31 million) in fintech in November. 2016.
Nutmeg will use the latest financing, which values the company at £ 245 million ($ 318 million), for its international expansion later this year, including a launch in Hong Kong in partnership with Convoy. As part of the investment, which is subject to regulatory approval by the Financial Conduct Authority (FCA), Rana Yared, a Goldman partner, will join the Nutmeg Board of Directors.
This is what the latest Nutmeg funding means:
- Digital wealth managers such as Nutmeg have increasingly attracted the attention of established banks looking to boost innovation. Since its launch in 2012, Nutmeg has grown rapidly, becoming the UK's largest robot advisor and the eighth largest wealth manager in the country with more than £ 1.5 billion (US $ 2 billion). badets under management (AUM). And the strength that Nutmeg and his peers have gained has attracted the interest of established financial institutions (FIs): JPMorgan Chase, Wells Fargo and BlackRock are among the other established institutions that have invested in robo-advisors, according to the FT. In addition, Goldman and investment giant BlackRock have partnered with Betterment, a US-based digital wealth manager, to offer investment products to startup customers. , for example. These investments are likely to allow established players to expand their distribution channels, while meeting the increasingly digital investment needs of customers.
- Goldman's investment strengthens its involvement in the retail banking sector in the UK. In May 2018, the investment bank led a £ 13.6 million ($ 18.4 million) Series B round of financing with Trussle Online Mortgage Broker. And later, in September 2018, the company launched its all-digital Marcus bank in the UK, with interest rates in excess of 1.5%. Goldman's PSI division typically invests in well-positioned companies to benefit from a closer commercial relationship with the bank, including offering products to Goldman's customers via its website. As such, we could see Goldman strengthen its limited Marcus offerings in the UK by offering digital wealth management services from Nutmeg.
We expect to see more incumbents occupy, then acquire, robo platforms. The success of robo platforms is largely based on their ability to acquire customers at a steady pace: Nutmeg currently has more than 64,000 customers, for example. Indeed, the algorithms used by these platforms to automatically perform investment tasks traditionally performed by human advisers make them less expensive and allow them to take customers with a much smaller capital investment.
However, this means that the typical investments deposited in these platforms are considerably less important than in the institutions in place, making scaling much more difficult: for example, Nutmeg recorded a loss of 12 £ 4 million ($ 15.8 million) for the last financial year.
Thus, in the long term, we expect these platforms to be purchased by established institutions, who have recognized the value of these startups' proposals, particularly with respect to capturing young tech-savvy customers.
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