PGIM’s CEO Steers $1.4 Trillion Away From SPACs, Sensing Bubble

(Bloomberg) -- David Hunt, who oversees $1.4 trillion as chief executive officer of PGIM Inc., said he’s dubious of the craze for special purpose acquisition companies and doesn’t think they’ll be embraced by sophisticated investors.

“We have these very unclear sources of capital that are given very broad mandates to move wherever they want,” he said in an interview on Bloomberg Television. “Personally, I begin to see that as a little bit of a sign of a bubble rather than as an ingenious new invention.”

PGIM, one of the world’s largest asset managers, doesn’t invest in SPACs directly and is being “very careful” about taking on indirect exposure, Hunt said. Meantime, it’s clear many investors can’t get enough. Blank-check companies have raised some $70 billion in 2021 and strategists at Goldman Sachs Group Inc. expect a “high level of SPAC activity to continue into 2021.”

Hunt said he’s “constructive” on risk assets in general because “it’s never been more punitive to hold cash” and thinks markets are at least 18 months away from a major correction. He cautioned that his view assumes a Covid-19 vaccine will be broadly available and the global economy keeps recovering.

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