Carnegie Cooke PROMOTER->"You are a notorious stockbroker whose resume contains enough scandal to rival a copy of The National Enquirer. What do you do in these scandal-weary times? If you're Ross Mandell, you open your own investment bank."
Article dir.megaweb.com
Reaching for the Sky
By Nicola Hobday, Aug 18 (The Daily Deal)
You are a notorious stockbroker whose resume contains enough scandal to rival a copy of The National Enquirer. What do you do in these scandal-weary times? If you're Ross Mandell, you open your own investment bank.
Mandell, whose sales practices in the 1980s and 1990s prompted numerous investor complaints and an investigation by the New York Stock Exchange, is now the chief executive of Sky Capital Holdings Ltd., a new investment bank, with ambitions to build a major international presence.
Sky Capital, founded a year and a half ago, has offices in New York and London and money to hire bankers and make acquisitions. Recently floated on London's Alternative Investment Market, Sky received 92,000 subscriptions for its shares and raised £3.7 million ($5.7 million). That adds to the £7.5 million it raised through a private placement earlier in the year.
Although Mandell's background is in private client stock broking, he wants to build Sky into a firm that also offers M&A and capital markets advice to small and medium-sized companies.
"We're going to be very big in the U.S. very quickly but we're also going to make a big statement in London," Mandell said. In two years, Sky "will have 300 employees in New York with multiple offices elsewhere." Sky is also looking at acquisitions and partners in Europe and Asia and is expected to announce a deal as early as Monday, Aug. 19.
So far, Sky employs about 25 people, mostly in New York. The National Association of Securities Dealers Inc. has approved it as a broker-dealer and as a member in the United States and Sky awaits Financial Services Authority registration to enable it to conduct business in Britain. That should come by year's end, either through an application or by an acquisition, Mandell said.
Mandell has high hopes for his firm, betting that it can emerge as the next Deutsche Banc Alex Brown or Robertson Stephens Inc. - a mid-sized bank with an international presence. "Out of every bear market comes a great firm," he quips. Mandell says he sees no competition head on. However, similar firms in the U.K. would probably be the likes of Close Brothers Group plc, Hawkpoint Partners, which offers advisory only services, and Bridgewell Corporate Finance Ltd.
The firm has already released its first research report. Sharon di Stefano, Sky's director of research, issued a "strong buy" recommendation on medical products and services company Polymedica Corp. Di Stefano had been an independent consultant for 10 years before joining Sky. Sky's head trader, Bruce Pettineo, joined the firm in October from Dalton Kent Securities Group Inc.
Despite Mandell's grand ambitions, Sky has yet to make its mark among rival firms in London. Many at its likely competitors said they hadn't heard of the firm, though they added that it was understandable that the sector is attracting newcomers.
"That's the market trend," said George Knight, a spokesman for Hawkpoint. "There've been quite a number of startups in the last six months."
Meanwhile, Mandell says he is determined that his history should not become an issue for his current project. According to varying newspaper reports, Mandell has been a stockbroker for at least 13 firms, including E.F. Hutton & Co., Oppenheimer & Co., Prudential-Bache Securities Inc. and D. Blech & Co. He has received at least six investor complaints, three job terminations and four regulatory actions, including a censure from the New York Stock Exchange for his sales practices.
"I was a stockbroker who had some personal problems," said Mandell, who is 45. He admits he was addicted to alcohol and drugs, but said he's been clean for 12 years. "Everyone wants to sensationalize those events," he said. "The issues that I've had, they're not as big a deal as they were made out to be."
He also admitted that he had disagreements and that he was forced to serve a six-week suspension from trading, but said he was never fined. "Perhaps I was abrasive," he conceded, "but today I'm a gentleman. I'm more diplomatic."
Mandell is certainly charismatic. He'll touch your knee during conversation to emphasize a point, repeat your first name to enforce familiarity and occasionally break off mid-sentence to indulge in outright flattery. Still, when talking about his past problems he shows signs of agitation, claiming certain newspaper articles about him were "hatchet jobs."
His ability to charm may explain some of the high profile board members Sky Capital has attracted. For example, Alexander Duma, Sky's chairman, has served as a director of Barclays de Zoete Wedd Ltd., Chase Investment Bank Ltd. and Smith New Court Corporate Finance Ltd.
Duma, who has known Mandell for six years, said he is convinced that Sky's business model can work. "If you're going to try and build a business you do it at a time when there are businesses to be bought and people to be hired," Duma said.
Also on Sky's board is Matthew Carrington, a former British member of parliament, and C. Thomas McMillen, a former Maryland congressman. One of the members of Sky's advisory board is Larry Pressler, who served in the U.S. Senate between 1979 and 1997.
"I've surrounded myself with some credentialed people whose credibility cannot be challenged," Mandell said.
Indeed, one of Sky's selling points, said Mandell, is that it's scandal-free. Where other investment banks are reassessing the links between analysts and investment banking mandates, Sky has none of those problems.
"We're clean as a whistle. There's nothing that can be unveiled," Mandell said.
Sky's decision to list in London was also unusual, as most of its business is currently in the U.S. Mandell insists Sky's future depends on a strong presence in Europe and wanted a London listing to give it access to the international capital markets.
Mandell also insists that floating in London involves more onerous listing requirements than an offering in the U.S., another reason why investors should be comfortable with Sky's protection from scandal.
Besides, he said, "The opportunity is not American; it's global. London is the international capital; it's the gateway to Europe and Asia."
The company sold 2 million new shares at 185 pence in the listing. Earlier in the year it sold 7.5 million shares to private investors in a round of funding at 100 pence each. Mandell owns the remaining 7 million shares. Having sold stock at 185 pence, shares in Sky were recently trading at 230 pence each, valuing Mendell's stake at £16.1 million.
Mandell clearly has big ambitions for Sky Capital and his backers clearly think his timing is just right. We'll have to wait to see what the suits of Wall Street and the City, still stunned by the scandal-fueled slump, make of it. |
