SAN FRANCISCO – W.R. Hambrecht & Co., a relatively new online brokerage that offers retail customers access to initial public offerings, recently closed the first of what are slated to be several private equity placements.
Novell Inc., a leader in the market of networking technologies, agreed to purchase a minority interest in the firm. Financial terms of the placement were not disclosed.
“There will be some more financial investors,” said W.R. Hambrecht & Co. spokesperson Sharon Smith.
The equity infusion coincided with news that Morgan Stanley Dean Witter & Co.’s Discover brokerage will offer its clients access to select, lead managed IPOs. Friedman, Billings, Ramsey Group Inc. recently announced that it also would give its retail customers access to venture capital investment and IPOs through its newly formed fbr.com (story page 8).
With retail investors already able to access new stock offerings from Charles Schwab, DLJdirect, E*Trade Securities and Wit Capital, W.R. Hambrecht is shopping around for other strategic investors.
Unlike other Web-based brokerages, which are only given a small allocation of an offering to distribute to customers, W.R. Hambrecht doles out stock to customers based on a Dutch Auction methodology. Under the format, investors bid for stock over the Internet and are allocated stock at the lowest acceptable price that would facilitate placement of an entire offering.
So far, W.R. Hambrecht has tested the revolutionary underwriting process on just one new offering: Ravenswood Winery.
Unlike many recent IPOs, which have seen their offering prices soar above expectations, Ravenswood Winery priced its 1 million share offering at $10.50, the low end of its proposed $10.50 to $13.50 price range.
Venture-backed Salon.com, which operates a variety of demographically targeted community sites, will be the firm’s next lead managed effort. The auction process on the San Francisco-based company’s 2.5 million share offering is expected to close in the middle of June, Ms.Smith said.