Online Investment Banks: Creating a Level Playing Field for IPOs

August 29, 2000

Abstract

Cambridge, MA, USA,  August 29,  2000  

  Report Published by Celent

Despite conquests of the trading and banking marketplaces, online financial ventures into IPO underwriting are failing to capture much of that lucrative market. According to a new report from Celent Communications, market acceptance of online investment banks as IPO underwriters has been and should continue to be slow. In the report titled " ," Celent evaluates the IPO process and the attempts of five online investment banking initiatives to bring IPOs to the Internet.

Members of Celent Communication's Retail Securities & Investments research service can download this report electronically by clicking on the icon to the right.

Despite the strong IPO market during 1998 and 1999, online investment banks only managed a few deals since the first online investment bank was established. While their business models are sound and offer ways to correct many of the existent inefficiencies of an IPO, these online ventures are being seen as little more than distributors of online IPO shares.

Largely due to active competition, capturing market share has been slow. Online investment banks are having to fend off more traditional investment banks and brokerages that are rolling out online distribution platforms similar to the underwriting online investment banks.

"Until the online investment banks strengthen and expand their suite of online products, such as merger and acquisition advisory services, we should expect to see the online platforms of traditional companies capturing the majority of IPO market share," notes Ariana-Michele Moore, analyst and author of the report. "Instantly, these platforms are able to inherit from their parents the market share that online investment banks struggle to achieve."

In addition to profiling the leaders of underwriting online investment banking, this 30-page report provides an in-depth overview of the IPO process and proposed solutions to its many inefficiencies as well as the progress of the online IPO and provides insight into its future.

A Table of Contents is available online.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

August 2000 Return to Abstract of this report.

 

EXECUTIVE SUMMARY

 3

INTRODUCTION

 5

AN INITIAL PUBLIC OFFERING

 6

 

Deciding to go Public

6

 

Orchestrating the Deal

 6

 

Textbook IPO

 7

 

IT Works in Theory But

 8

 

Merging the Internet w/ IPOs

 10

 

The Dutch Auction

12

ONLINE INVESTMENT BANKS

14

 

Epoch Partners

 14

 

WIT Soundview

 15

 

WR Hambrecht + Co

 17

ONLINE IPO DISTRIBUTORS

21

 

DLJ Direct

21

 

FBR.com

23

COMPARISON

 25

SIGNS OF SUCCESS

27

FUTURE TRENDS

30

        

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