(November 15 – 09:45 ET) – Online investment banking is lurching forward as top brokers and venture capitalists joins forces in a co-operative venture, forming an investment bank.
Charles Schwab & Co. Inc., TD Waterhouse Group Inc. and Ameritrade Holding Corp. are entering a deal with three venture capitalists: Kleiner Perkins Caufield & Byers, Trident Capital and Benchmark Capital.
These six firms and the new bank’s management will own the new bank. The three online brokers would have exclusive access to the bank’s underwritings.
The new bank, still nameless, will focus on underwriting, managing and distributing equity offerings for information technology and Internet companies. Down the road it will add research, private placement and strategic advisory services.
With the focus on tech underwritings the new venture will be based in Silicon Valley and headed by Scott Ryles, former managing director and head of Technology Investment Banking at Merrill Lynch. It is expected to be operational in early 2000.
“This new firm, through its relationship with Schwab, TD Waterhouse and Ameritrade, will be designed to respond to online investor demand for new issues, which to date has not been fully satisfied by the traditional offering process,” said Ryles in a prepared statement. “This bank, together with the online brokers, will seek IPO pricing that better reflects the total underlying investor interest in pending IPOs.”
The preliminary agreement has yet to close. It still requires regulatory approval.
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