Banking giant JP Morgan has confirmed a deal to acquire Clonakilty-based fintech Global Shares in a multimillion-euro deal.
The deal is worth $730 million (€665 million), making it one of the largest exits by an Irish fintech.
The transaction, which is subject to regulatory approvals, is expected to close in the second half of 2022.
The acquisition has been described as “great news for west Cork” with the scope for more jobs to be created locally.
Informed sources said the acquisition would allow the fintech to accelerate its ambitious plans, with Global Shares to retain its headquarters in Clonakilty.
“There will be no job losses. In fact, the opposite is expected, with more roles to come,” a person close to the deal said.
"This is a real cause for celebration for the local region. The opportunity to work for a company such as JP Morgan while still being able to live in west Cork is what dreams are made of," the person added.
The company, founded in 2005, originally operated as a low-margin service business. However, under the stewardship of Tim Houstoun it has transitioned to becoming a leading global provider of employee share management products.
Global Shares has nearly $200 billion (€182 billion) in assets under administration across 650,000 corporate employee participants. Its main competitors are Morgan Stanley and the Australian firm Computershare, while clients include Saudi Aramco, L'Oréal, Krispy Kreme, Bosch, Bose and Cargill, the world's largest privately owned company.
“We are tremendously excited to partner with JP Morgan and to continue on our journey of being a leading player in equity incentive services,” Mr Houstoun said. “Together we will accelerate the expansion of our business globally as well as the range of services we offer to our clients and their employees.”
New business
Global Shares last year revised its revenue guidance upwards after a huge surge in demand for its products. It forecast full-year revenues of $44 million (€40 million), compared with a previous estimate of $39 million in sales. The company also announced plans at that point to create more than 200 jobs by the end of 2022 to bring the total headcount to more than 550 people.
Accounts filed at the companies office for Global Shares PLC show it had accumulated losses of $24 million by the end of 2020. It made a loss that year of $6 million on revenue of $25 million. New business in the year amounted to more than $16 million, the directors report said.
Prior to the acquisition, Global Shares had been weighing a possible flotation in 2024, a point at which Mr Houstoun predicted the company would be worth $1 billion.
Motive Partners is the company's largest shareholder after taking a 40 per cent stake in the business in 2018 in a $25 million deal. Other backers include IFG founder Richard Hayes and his family, Duke House Investments, which is led by property investor Robert Neill, and Carrig Glen Investments, a Jersey-based vehicle. More than 500 employees are also expected to gain from the sale.
The Irish State is also a winner as the Ireland Strategic Investment Fund (ISIF) is a backer of Motive.
In a letter to shareholders seen by The Irish Times, Mr Hayes, who formerly served as chairman of Global Shares, said JP Morgan was paying an effective price of $730 million, or more than €5 per share at today’s exchange rate.
In his letter, Mr Hayes stressed the important role that Motive Partners and ISIF played through their investment. He also paid tribute to the role of some other well-known investors, including Pearse Mee, Eoghan Quigley and Richard Whelan.
Tech investments
Over time, JP Morgan said it would integrate Global Shares into its asset and wealth management line of business.
JP Morgan, headed by Jamie Dimon, is one of the biggest investment banks globally with a record $48.3 billion in profit in 2021. It employs 271,025 people worldwide.
The deal for Global Shares comes as JP Morgan earlier this year said it intended to spend $15 billion on tech investments in 2022.
"The addition of Global Shares is complementary across our entire JP Morgan franchise from new client acquisition for our global private bank and US wealth management businesses to providing new, innovative capabilities to private and public companies globally and helping their employees manage their wealth," said Mary Callahan Erdoes, chief executive, JP Morgan Asset & Wealth Management.
JP Morgan was advised by JPMorgan Securities, as financial adviser, and Freshfields Bruckhaus Deringer and McCann FitzGerald as legal counsel. Global Shares was advised by BofA Securities as financial adviser and Proskauer Rose and Arthur Cox as legal counsel.
