Europe’s IPO market troubles are well known, but is it so bad that people need to invent apparently fake deals? One would hope not, but the case of the mysterious Swiss Investment Solution listing last week may raise fresh questions.
Pilot-phishing
On 15 May, this news service came across a press release from German service Pressportal titled By valuation: Swiss Investment Solution publishes book building range for IPO.
The German-language release said that Swiss Investment Solution, “a Geneva-based investment company specialising in mergers and acquisitions for institutional clients, asset management, and investment brokerage and securities, has announced the details of the IPO.”
The deal, supposedly led by Citi, JPMorgan and Commerzbank, according to the release, could value the asset manager at up to EUR 4bn, higher than the commissioned valuation of two Big Four auditors named in the piece.
This raised a red flag. No one at this news service had ever heard of Swiss Investment Solution, or the IPO. There appears to be no online presence for either its named CFO Mareile Lacazette or CEO Benjamin Hain outside of the press releases.
Three sources close to the banks named had also never heard of the company. “We are not involved in that ‘fake’ IPO,” said one.
But official comment on the case was hard to come by. JPM did not return a request for comment, while Citi and Commerzbank declined to comment.
The release claimed the listing had been approved by regulators and that existing investors in the asset manager would be granted preferential share information, after which and “only then” would institutional and external investors be served.
This followed a release from 11 May in which the asset manager says it had recently increased is capital in preparation for the IPO, and that a recent investment in Japanese asset manager Daiwa SB had fuelled demand for the company’s shares. The pre-IPO capital raise statement was published on BusinessWire on 15 May and aggregated by several outlets.
The company also claimed to have been in business for fifteen years and a key stakeholder in a “triple-digit” number of IPOs, but several European ECM veterans we spoke to had never heard of this Swiss asset manager. Also, Daiwa SB was merged with Sumitomo Mitsui Asset Management in 2019.
An earlier statement on Presseportal on 28 April, the first release from Swiss Investment Solution, announced the desire to go public and showed a picture of a supposed supervisory board. But a reverse Google Image search revealed that the board is the executive board of German bathroom manufacturer Hansgrohe Group.
Call me maybe
Swiss Investment Solution has a website and suggests it is linked to FINMA-regulated asset manager Alternative Investment Solutions (AIS).
But Samir Lakkis, partner at AIS, today (24 May) confirmed his outfit had never heard of Swiss Investment Solution until receiving a letter from FINMA addressed to Swiss Investment Solution at AIS’s address. “I doubt this IPO is real,” he said, reiterating that Swiss Investment Solution has never contacted or been associated with AIS.
A FINMA spokesperson confirmed that Swiss Investment Solution is not registered with the regulator and, while declining to comment on any specific action or investigation, said that if FINMA receives indications of possible violations of Swiss financial market law, it will investigate and act if necessary
The glaring discrepancies surrounding Swiss Investment Solution prompted this news service to take down the IPO press release. Some, including Presseportal, also removed their statements, but several of Swiss Investment Solution’s comms remain online, with a new statement advertising a new type of account with high interest for customer deposits coming online today (24 May).
An email to the address on Swiss Investment Solution’s website laying out all the issues found has gone unanswered. An unidentified person at the number provided by Swiss Investment Solution answered a comment request call on Monday 15 May, and finally another one today, but in both cases deferred any further conversation to a later day, once the right contact was in the office. In between, the phone has gone unanswered.
Businesswire has not responded to a comment request pointing out the issues with Swiss Investment Solution and its releases and has since republished Swiss Investment Solution’s IPO price-range statement dated 23 May. Press release aggregation site Zenodo had also run the release but has since taken it down, classifying it as “spam”.
As fake news has spread virally throughout politics and mainstream news, it is curious to see the phenomenon creeping into corners of finance such as equity capital markets.
The purpose of the exercise from whoever is behind Swiss Investment Solution is unclear. But a November warning from the Australian Securities and Investment Commission on pre-IPO scams could offer a potential read-across. The regulator said that since the high-profile IPO of Porsche [ETR:PAH3], there has been an increase in attempts by scammers using fake IPOs to try and fool investors into taking part in phony pre-IPO funding rounds.
The widespread threat of financial fraud and ever more elaborate “deep fake” attempts shows that there should be a review by regulators and possibly a new enforcement framework, an ECM lawyer said. Cases like the Swiss Investment Solution IPO could generate serious issues – reputational and financial — and the instances in which unlawful actors are prosecuted and fined are still low, he added.
The curious case of Swiss Investment Solution has puzzled Europe’s ECM actors. While not necessarily evidence of wider symptoms, it is clearly a cautionary tale for Europe’s IPO market and investment community.
