Original source:
Forbes

How this 80-year-old female banking entrepreneur made her fortune through fintech SPACs

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June 19, 2022
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Jump to heading How this 80-year-old female banking entrepreneur made her fortune through fintech SPACs

Betsy Cohen is a businesswoman, lawyer and investor who has been breaking glass ceilings ever since the days of President Nixon, and she has no plans to stop.

Betsy Cohen at 25 was finishing up an internship at a top law firm in Philadelphia and starting her last year at the University of Pennsylvania Law School – this was the summer of 1965. Cohen, as a high-achieving student who succeeded on the job, may have anticipated to be awarded a full-time employment. The only difficulty was that she was a woman.

"They told me the senior partner at the company wasn't ready to give a woman a position," Cohen remembers from her New York City office in a video discussion with Forbes. "I told him what I was actually thinking: 'I believe it's your loss.'"

It is their loss. Cohen started a bank in 1974 after working as a clerk for a federal appellate court and founding her own law company. She operated it for a quarter of a century before selling it for more than $330 million. She subsequently founded The Bancorp, which focused on offering white-label banking and payment services to non-bank firms such as PayPal and oversaw it until the end of 2014.

Recently, Cohen has established herself as a productive dealmaker in the wild world of SPACs, or special purpose acquisition companies. She was an early adopter of the reverse merger mania, concluding her first transaction in March 2016. Cohen and her partners, including her son Daniel, have amassed over $4.2 billion in 13 SPAC offerings since then, with six acquisitions completed to date. Only two other organizations have done more reverse mergers than Cohen and her colleagues.

"What I've done is a succession of opportunities, rather than a cookie cutter career, since nobody else was leading me," Cohen, now 80, says of her career. "I was my own person when I was approximately three years old—my parents would vouch to that."

Cohen's independent thinking has won her a wealth of $230 million, according to Forbes, using calculations and estimations of her earlier exits, cash earnings, and holdings in The Bancorp and current SPAC listings. (Cohen refused to provide any details on her net worth or assets, claiming a wish for privacy.)

Cohen's portfolio, like almost everyone else's, has been impacted by this year's market slump, which has buried SPAC acquisitions and fintech companies. A SPAC merger with the popular Israeli trading app eToro announced in early 2021, seems to be on hold, owing to rumors of a lowered enterprise value and the business investigating other finance alternatives. (Cohen declined to comment on the progress of the transaction.) As of June 14th’s market closing, the five firms Cohen took public that are still publicly traded had dropped an average of 33% since the start of the year.

Cohen isn't too worried. She believes that it is a "wonderful moment" to invest since values are lower, allowing for greater upside potential. "People's ideas of the total worth of their firms become more realistic in bad markets," she adds.

"Betsy Cohan is the embodiment of self-made success," says CEO of CVS Health, Karen Lynch, who met Betsy Cohen while acting as president of insurer Aetna from 2015 to 2021. (From 1994 until May 2018, Cohen sat on the Aetna board of directors.) "And, throughout her career, she has epitomized elegance under pressure."

Betsy Z. Cohen was born in 1941 and raised in Philadelphia. Her father was a surgeon who worked as a doctor in the army in North Africa during WWII, while Betsy and her younger sister were cared for by her mother. She graduated from Bryn Mawr College in 1963 and subsequently attended the University of Pennsylvania Legal School, where she was one of only six female students in a class of over 200 and acted as Editor for the school's law review. "I was hugely prominent," she adds.

Cohen's law career was short yet fruitful. She co-founded a commercial legal firm, was a clerk for the United States Court of Appeals for the Third Circuit, and a professor at Rutgers University Law School, which made her the East Coast's sole female law professor. (The first being Ruth Bader Ginsburg, years prior to being appointed to the Supreme Court.) Despite her talent for the practice of law, Cohen wanted to be a business builder: "I understood my potential was better achieved as a client, rather than a lawyer," Cohen says of her career change. "As my specialization was everything related to the law and banking, my intuition was to form a financial organization."

Cohen did exactly that in 1974, when he established Jefferson Bank. At 32 years-old, Cohan was the first female bank CEO in Pennsylvania and also one of the first ever in the United States. She managed the bank's development for the following 25 years while simultaneously bootstrapping other businesses, along with a shipping and leasing company, while bringing up her 3 children.

"She had to do everything; there was no work-life balance," recalls Daniel Cohen, the oldest of her three children. (Cohen's second son, Jonathan, works alongside her husband Edward, a lawyer, businessman, and economic historian who teaches at the University of Pennsylvania, the place where the Cohens met as law students; Abigail, their youngest child, died around 20 years ago.)

Cohen sold Jefferson Bank for $337 million in 1999 to Hudson United Bancorp of New Jersey after growing it to a $1.8 billion (in assets) business and Philadelphia's biggest locally owned community bank. After taxes, she and her husband, who was also a stakeholder, received an estimated $50 million. Cohen, who was then 57, remained on for several months to head the Jefferson division, however, she had already set her gaze on the budding fin-tech market, and she quickly arrived at her next big thing: providing non-bank enterprises with digital banking services.

"One of the reasons I sold was because I realized that it was going to be challenging to explore what was coming," Cohen says. "Transforming a heritage firm with branches was not a business model I intended to pursue in the future since I didn't believe that was how customers would access their financial data or money ten years from now."

The outcome was The Bancorp, a commercial bank whose major break was offering private-label banking services to non-bank enterprises. It included a platform for processing debit and credit card transactions. Cohen's Bancorp – half bank, half tech provider – offered the financial infrastructure for different organizations' initial online presence when they developed website and e-commerce operations in the early eighties. Blue Cross Blue Shield and Drexel University were among the early customers, as were some of the Internet's biggest success stories, such as PayPal. Under Cohen's tenure, the Bancorp's assets increased to roughly $5 billion.

Cohen opted to test retirement after stepping down as chairman and Chief Executive Officer of The Bancorp towards the end of 2014. It lasted a short 8 days. "I realized, as did everyone else, that it wasn't going to go well," Cohen says. "I recognized the necessity to come up with something else."

She, along with her son Daniel, listed her first SPAC a few weeks later, in February 2015, generating $100 million dollars. A year later, that vehicle combined with CardConnect, which was subsequently purchased by First Data for $779 million. A second SPAC IPO garnered $175 million and combined with money transfer company Intermex (which changed its name to International Money Express, Inc.). Cohen established her current enterprise in 2019 by forming FinTech Masala, LLC, a family office investment firm that Cohen oversees. Over the last three years, FinTech Masala has executed several SPAC transactions with payment businesses; Payoneer Global, Paya Holdings, Shift Technologies (a peer-to-peer used car marketplace), and Perella Weinberg Partners (a financial advice company).

She has invested the time and energy into understanding the SPAC world better than just about anyone," said president of Perella Weinberg Partners, Andrew Bednar. He claims she introduced his firm to several of the institutional investors who took part in the firm's PIPE investment and who are still invested in the company business to this day. Cohen's dealmaking technique is "more connection driven than transaction focused," according to Bednar.

Cohen spends her time between properties in Manhattan, Florida, and an island off the coast of Maine. She also sits on the boards of many organizations, such as The Brookings Institute, as well as The Metropolitan Opera, where she is treasurer, a contributor (of at least $1 million), and regular patron.

Beyond her evident effect on capital flows, Cohen has had a more subtle impact on Wall Street, smashing glass ceiling after glass ceiling during her half-century career, and teaching and encouraging women who are currently flourishing at the highest echelons of business and financial services.

"She has always been a mentor to me, advising me to ensure I was doing the right things," said CVS Health CEO Lynch. "She is one of those ladies who gives other women strength." She didn't simply create place at the table; she also showed us how to get there."

However, Cohan isn't thinking about her legacy just yet. She's preoccupied with the next transaction. "I suppose I'd want to keep going until I can't," she tells Forbes.

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For more SPAC news check out our other articles. To view all updated SPAC metrics for over 700 U.S.-listed SPACs, including liquidation date, yield to liquidation, last price, gross spread, and much more sign up for a free SPACinformer account.

(As of June 17, 2022, funds managed by Cohanzick Management, LLC and its affiliates do not own a position in The Bancorp, CVS Health, Perella Weinberg Partners, Paya Inc., Shift Technologies).


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