Ex-Credit-Suisse boss Brady Dougan is making only slow progress with his plans for a new investment bank. Large investors have opted out, and the project goal is looking much more modest.
Brady Dougan had planned to launch his new investment bank a year ago. The basic outline of the ex-CEO’s plan was clear: the creation of a slimmer investment bank to compete with the established Wall Street institutions, who due to regulatory restrictions, have been frozen out of some financing business sectors.
An injection of $3 billion in investor funds was meant to get the planned investment bank up and running – money from the oil sultanate Brunei had been earmarked. Temasek, the Singaporean state fund had also promised start-up funds. Other funders cited were the private equity firm Pine Brook Partners as well as New York Life Financial.
U.S. Deregulation Trend
However Dougan's «investment bank of the future», as it was dubbed, has had to roll back its ambitious plans. Brunei, Temasek, Pine Brook – have all withdrawn their funding offers according to the «Wall Street Journal» (behind paywall). One reason apparently is the trend for more deregulation under the Trump administration. In addition, Brunei wanted to exercise more control over the planned bank.
All this has delayed the «comeback» of Dougan, one of the Wall Street veterans, who in the deregulated 1990s was seen as one of the craftiest traders and most innovative product developers. After the financial crisis Dougan had steered Credit Suisse on a strict trading orientated strategy, and he stuck to this strategy even after the regulatory environment changed.
«Only» $1 Billion
But Dougan isn't ready to give up on the project, according to «The Wall Street Journal». Together with ex-colleagues including Sean Brady, Dougan is pursuing the project as Exos Financial – with different investors. The 59-year-old banker has already raised $750 million towards a $1 billion goal to launch Exos.
Dougan's investors include a fund run by ex-Barclays boss Bob Diamond, and George Soros' hedge fund has expressed interest. Exos has already hired 40 people, who are working in a WeWork office in Manhattan, paid in part with shares in the start-up.
Complex Credit Paper
Dougan hasn't actually tweaked the business model: Exos is meant as Wall Street trading house for mortgages, corporate loans and other types of debt. The company is also building a trading and risk software that it could sell to other firms.
The original plan was for an investment firm backed by Scepter Partners, which is in turn financed by the royal family of Brunei. Scepter won a mandate to manage Monaco's newly-created sovereign wealth fund last year. Also last year, Dougan was listed alongside Diamond as a managing partner of Scepter. Both names are no longer listed in affiliation with Scepter, a syndicate of ultra-wealthy families and state investments funds.
