WR Hambrecht & Co, the firm set up by veteran investment banker Bill Hambrecht to take companies public through an online auction system, has received a $20m equity investment from Reuters Plc subsidiary, Instinet Corp. The deal gives Instinet, which is an electronic brokerage agency, an 11.4% stake in the growth-stage investment bank which looks to sell shares in new companies to high bidders rather than long-time customers of the underwriting banks.
The agreement will effectively open up a new avenue of investment and possible IPO candidates for Hambrecht, as Instinet’s roughly 15,000 clients will now have access to the bank’s OpenIPO system. Additionally, some of Instinet’s larger institutional customers – as opposed to individual online investors – should now be more likely to bid on Hambrecht-led offerings. Although larger and more traditional investment banks will remain attractive options for companies looking to go public, the deal with Instinet instantly gives Hambrecht more reach and visibility.
The two companies say they are also in advanced negotiations regarding an international joint venture, which they say would increase the efficiencies of the capital raising business in Europe and Asia. The Instinet deal follows a similar investment in Hambrecht last month by software company Novell Inc, although the size of Novell’s investment and stake have not been disclosed. At the time of that announcement, Hambrecht said it was still looking for strategic capital to fund its ongoing business objectives.
