Wedbush Morgan Plans Net IPOs for Small Investors
Los Angeles-based brokerage firm Wedbush Morgan Securities will announce today a plan to sell initial public offerings to individual investors via the Internet.
Wedbush Morgan plans to follow in the footsteps of high-profile upstarts such as Wit Capital Corp. and W.R. Hambrecht & Co., which have specialized in making IPOs available electronically to small investors. Previously, brokerage houses doled out coveted IPOs only to powerful institutional investors such as mutual funds.
Wedbush will sell IPOs and so-called secondary stock offerings on a first-come, first-served basis. The service is open to all investors, not just existing customers, said Eric Wedbush, managing director of investment banking.
The strategy might help Wedbush Morgan establish a better presence in the IPO market, where it has been a bit player, said Richard Peterson, market strategist at Securities Data Co. in New Jersey.
The firm has lead-managed only one IPO in the last three years, according to Securities Data. That company, Willis Lease Finance Corp., which leases commercial aircraft and equipment, is up 113% from its September 1996 IPO offer price of $8, according to Securities Data.
Of Wedbush Morgan’s nine lead-managed IPOs in the 1990s, four are down from their original price, Securities Data said. A fifth now trades on the Bulletin Board after falling steeply in price and being delisted from the Nasdaq Small-Cap Market.
“The way they’re doing business now, they’re not showing up on the [IPO] register at all,” Peterson said.
Though it has not lead-managed many deals, the firm has played a big role in co-managing several IPOs and in bringing secondary offerings to the market, Wedbush said.
In a secondary offering, a public company sells additional shares to the public.
With individual investors clamoring for the chance to buy to potentially hot IPOs, a cottage industry of firms has sprouted in the last few years to cater to them. In addition to Wit Capital and W.R. Hambrecht, several online brokerage firms such as E-Trade Group and Charles Schwab now make IPOs available to small investors over the Internet.
Investors can access Wedbush Morgan’s offerings through https://www.einvestmentbank.com. Its first two deals available online will be a lead-managed IPO for Intellisys Group Inc., which sells equipment for video conferencing, and a secondary sale for Obie Media Corp., a provider of outdoor advertising displays.
