Bankers and SPACs Are the New Big Thing

Investors eager to buy into Europe’s next big thing in financial services are seemingly spoilt for choice. Several former top banking and insurance executives — including Jean Pierre Mustier, Tidjane Thiam and Martin Blessing — are looking separately to exploit the mania around special purpose acquisition companies by raising funds to plough into fintechs and other high-growth businesses. Grabbing SPAC headlines is the easy part.

With tens of billions of dollars flowing into SPACs right now, jumping on the bandwagon is an obvious move for an out-of-work finance executive. These so-called “blank-check” companies are listed vehicles used to acquire privately held businesses and thereby take them public. Who better than a former bank chief executive officer could identify the best takeover targets in the finance industry?

Well, that’s how the pitch goes anyway. But these execs have spent much of the past decade shrinking their businesses rather than expanding them — and with mixed success. Investors will need to read beyond the headline names when determining whether these SPACs really will be able to sniff out growth stocks. Just like the wealthy celebrities lending their names to tech and clean energy SPACs, the teams behind the well-known executives will be critical to any success.

While running a big bank might seem a good training ground, spotting and acquiring the next finance success story requires vision, an eye for talent and investing expertise — rather than leadership. What’s more, Mustier, Thiam and the others will be competing with many other cash-rich investors. Driving a hard bargain will determine the financial upside for their SPAC’s backers. Picking out winners among emerging companies isn’t necessarily a skill that bank CEOs would have acquired.

Take Mustier, who stood down from managing Italy’s UniCredit SpA just last week. True, he was smart enough to realize years before his peers that running a second-tier stock-trading business wasn’t going to remain profitable for long. But that demonstrates a vision for future pitfalls, rather than opportunities. Many of his boldest moves involved exiting businesses, including some of UniCredit’s crown jewels. Shares of FinecoBank SpA, an online lender, have risen 50% since UniCredit’s 2019 divestment.

Mustier will be running his SPAC venture with Diego de Giorgi — previously an investment banker — and he’s backed by former colleagues at Tikehau Capital, a $35 billion private capital asset manager, and French luxury billionaire Bernard Arnault. Along with their own connections, it’s Tikehau and Arnault’s family office that will bring the dealmaking prowess.

As for Thiam, before getting pushed out of Credit Suisse Group AG amid a spying scandal, he too spent years slashing Credit Suisse’s balance sheet and refocusing the bank on wealth management. His attempt at making a big acquisition in his prior job running the Prudential Plc insurance company drew the ire of shareholders because of the price, and of regulators, whom he hadn’t filled in on his plans. The Thiam SPAC’s CEO, another ex-Credit Suisse banker, has a background in investor relations and corporate finance advice, not investing or business turnarounds. In fairness, the private fund of investment giant PIMCO is a co-sponsor of the SPAC, which will reassure investors.

Blessing, whose eight-year stint running Germany’s Commerzbank AG left the bank needing more restructuring, is still lining up backers for his SPAC, Bloomberg News has reported. Potential investors will want to vet those carefully, too.

SPACs may be the hottest thing on Wall Street. And putting cash to work with a who’s who of banking may seem a relatively safe bet. It’s quite possible that they’ll land great deals, freed from the constraints of running large, complicated and dated businesses. But SPACs are a risky proposition by themselves, as my colleague Chris Bryant often warns. Ex-bank CEOs are no guarantee of success.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.

©2021 Bloomberg L.P.

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