Exclusive: UBS imposes SPAC restrictions on wealthy clients

Earlier this month, UBS (UBS) determined its wealth administration clients might be allowed to commerce SPAC shares solely on an unsolicited foundation, an individual conversant in the matter advised NCS Business.

In different phrases, UBS advisers aren’t permitted to name their wealthy clients to encourage them to purchase or promote particular SPACs buying and selling on the open market. Once the newly merged entity has gone public, the UBS advisers might be allowed to pitch the shares.

A UBS spokesperson declined to remark.

The determination was made, the individual conversant in the matter mentioned, due to the restricted availability of data and analysis on SPACs earlier than they merge with personal corporations.

Some SPACs ‘make no sense’

Indeed, little is thought about SPACs till they decide what firm they are going to goal to deliver public. SPACs haven’t got working companies, only a clean test and a administration workforce trying to find the fitting merger candidate.

The SPAC restrictions at UBS don’t lengthen to SPAC IPO choices. UBS monetary advisers are nonetheless in a position to overview these so-called major SPAC choices with eligible clients in offers the place UBS is an underwriter of the IPO, the individual mentioned. (Private banks like UBS usually solely supply these offers as much as wealthy clients with web value above a specified degree.)

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The SPAC restrictions by UBS come as some consultants, together with former Federal Reserve officials and famed investor Jeremy Grantham, fear the blank-check increase is overdone. US-listed SPACs have already raised more cash this 12 months than in all of 2020 — and the 12 months’s first quarter hasn’t even ended.

“If you look at the SPAC market, there’s some really attractive new companies and new technologies coming to the market that are financing effectively,” Rick Rieder, BlackRock’s chief funding officer of worldwide mounted earnings, advised NCS Business this week. “And then there are some that make no sense.”

Rieder expressed concern about how some SPACs will ever be capable of develop into the elevated multiples they’re garnering. “You’ve got to be really selective about where you go and not just jump onto that train because it’s gotten crazy,” he mentioned.

Big banks like UBS are cashing in

Celebrities including Alex Rodriguez, Jay-Z and Ciara Wilson have all lent their star energy to SPACs in latest months.
The SEC issued a warning final week urging traders to not purchase SPACs merely due to a star’s involvement. “Celebrities, like anyone else, can be lured into participating in a risky investment or may be better able to sustain the risk of loss,” the SEC mentioned.
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Big banks, together with UBS, are cashing in on the SPAC craze. Investment banks obtain charges in trade for locating patrons for SPAC shares and placing a ground beneath their share worth. These charges aren’t as massive as what Wall Street companies make on conventional IPOs, however the sheer quantity of SPAC offers have helped make up for that.

UBS was the first underwriter, or e-book runner, on 22 US-listed SPACs final 12 months, sixth amongst main Wall Street companies, based on Dealogic. The Swiss financial institution was one of many lead underwriters, together with Citigroup, for Bill Ackman’s SPAC, which raised $4 billion final July and remains to be trying to find a merger candidate. UBS has led one other 15 SPACs to date this 12 months, based on Dealogic.
UBS is actively hiring on this booming a part of the capital markets enterprise. Every week in the past, the company listed a position on LinkedIn for a New York-based funding banker squarely targeted on SPACs.
Martin Blessing, the previous co-president of UBS Global Wealth Management, reportedly launched a SPAC earlier this week aimed toward shopping for a monetary know-how firm.

It’s not clear whether or not different main banks are imposing related restrictions. Wells Fargo declined to remark, whereas representatives from companies together with Goldman Sachs, Bank of America and JPMorgan didn’t reply to inquiries.


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