Blank check companies are the hottest trend on Wall Street. With Brady Dougan, another ex-chief executive of a major Swiss bank is now jumping on the Spac bandwagon.
SPXZ: That's the stock market abbreviation for a new exchange-traded index fund (ETF) designed to follow the prices of so-called Spacs. Behind the fund are hedge fund Morgan Creek Capital Management and fintech Exos Financial – and behind the latter company, in turn, a name that still has a ring to it in Swiss banking: Brady Dougan, CEO of Switzerland's second-largest bank Credit Suisse (CS) from 2007 to 2015. This was reported by the American newspaper «Wall Street Journal» (behind paywall).
Tidjane Thiam and Sergio Ermotti
With his person, another ex-chief of a major Swiss bank jumps on the hottest trend on Wall Street. Earlier, it became known that both former UBS Group CEO Sergio Ermotti and Tidjane Thiam, Dougan's successor at CS, are involved in a Spac.
Spac stands for Special Purpose Acquisition Company – these shell companies, also known as blank check companies, go public on a stock exchange in order to then buy private companies, which are then listed virtually through the back door. In doing so, they hit a nerve on New York's Wall Street: In the USA, more than 200 Spacs entered the race in the corona year 2020 and raised around $70 billion in capital from investors.
Swiss Hurdles
Swiss firms could soon be targeted by foreign Spacs. However, various hurdles stand in the way of listing such shell companies in Switzerland. This is despite the fact that the Swiss stock exchange operator SIX, in particular, would be interested in such a segment.
For the time being, the trend is still coming from New York, where the American Dougan settled after his tenure at CS. From the financial metropolis, he first tried to build up his own investment bank – with billions from the Middle East. But the initial capital did not come together, and the banking license never materialized. Instead, Dougan is now undertaking to disrupt the investment bank business model at the helm of fintech Exos. Wall Street observers even gave Exos a chance of success.
A Mass Product
For the time being, however, the ex-CS boss is rather going with the flow when he now also seeks to profit from the Spac boom. In view of his long career in high-priced and highly complex investment banking, it must come as a surprise that he is focusing on ETFs, of all things, a relatively cheap mass product.
Once again, however, there is a lot to be gained: the sponsors, i.e. players such as ex-big bankers Thiam and Ermotti, who collect the money from investors, usually get some 20 percent of the shares or warrants on the respective Spac. For the makers of SPXZ, one of the first three ETFs ever on the Spac theme, the bet should also work out.
