Seaspray Financial, the asset management firm founded by former Dolmen Stockbrokers chief Paul McGowan, has launched a Private division led by former Bank of Ireland (BoI) Private Banking executives.
Seaspray Private wealth management already has about 150 clients with at least €500,000 to invest – much of it recently committed to structured products designed to capitalise on the current rebound in share prices from April’s Covid crisis lows.
The unit is led by Danny O’Leary, an associate director of BoI Private Banking from 1999 to 2019. He has recruited two former BoI colleagues: head of client services Adele Taylor and business development director Brian Walsh.
Mr. O’Leary said his aim is “to grow and protect our clients’ wealth across generations”.
One of the first investment opportunities provided by Seaspray Private is a so-called ‘kick-out’ bond issued privately by Goldman Sachs.
These derivatives allow investors to take a stake in an index representing a basket of stocks, with capital protected in full unless that index falls below a particular threshold on a specific anniversary date.
If the index moves higher and reaches an anniversary date, investors are ‘kicked out’ at that point and paid a pre-set level of profit, regardless of how much higher than index may have moved.
Seaspray’s first kick-out bond has attracted more than €5m from about 25 clients. It offers the potential to receive a 15pc return within a year – so long as the index is even marginally higher 12 months after the value set on May 4.
Mr. O’Leary says the potential 15pc payout is unusually high for kick-out bonds and reflects current market volatility and depressed prices, which he says makes this “one of the very best times to invest”.
If the index never exceeds its original level and finishes at least 40pc lower after 10 years, investors would take an equivalent hit to their investment at that point. Goldman Sachs would guarantee the full return of original capital if the index was less than 40pc lower.
Seaspray’s index is built from 40 North American and European stocks, including AT&T, Wells Fargo, L’Oreal, Canadian National Railway, Alphabet, Microsoft, AstraZeneca, Salesforce, Accenture, and Total.
“Critically, we managed to price the derivatives in the middle of the volatility of Covid-19,” Mr. O’Leary said.
“These products can be very attractive options for generating returns because cash is not going to give us anything over the next five to 10 years.”
Mr. O’Leary and Ms. Adele will work from a Galway based, Mr. Walsh from Cork, and Mr. McGowan from Seaspray HQ on Leeson Street in Dublin.