***Safeguard Scientifics abandons B-to-B Web incubator to focus on Internet infrastructure***
By Steve Gelsi and Jenny Spitz, CBS MarketWatch
Last Update: 7:36 AM ET Apr 10, 2000 NewsWatch
NEW YORK (CBS.MW) -- In a move that may signal a shift in the market for initial public offerings, Safeguard Scientifics said it'll stop investing in Business-to-Business Internet firms.
The move is further proof of a death-knell for a hot sector of the new issues market, which took over last year after e-commerce offerings cooled off.
Last week for example, Internet business-to-business incubator Divine InterVentures scaled back the number of shares it plans to sell to the public amidst a volatile Nasdaq.
The Wall Street Journal reported Monday that Safeguard Scientific (SFE: news, msgs), an investor in the successful Internet Capital Group (ICGE: news, msgs) and others, will now focus on companies that are building up the Internet infrastructure to handle crushing demand for bandwidth.
Safeguard won't abandon its current business-to-business investments such as Emerge (EMRG: news, msgs), a cattle marketer that went public this year .
Safeguard backed Friday's IPO for Opus360 (OPUS: news, msgs), which runs a Web site to help companies find freelance talent.
The company's President and Chief Operating Officer Henry Wallaesa told the newspaper that infrastructure investing is the "next big thing" and that the market opportunity is bigger than business-to-business.
Safeguard Scientific plans to invest about $350 million in infrastructure plays in the next 12 months. It's eyeing 40 investments this year averaging $15 to $20 million.
The company has investments in 12 public companies and 30 private ones. Its affiliates have investments in about 250 firms.
On Friday, Safeguard shares climbed 17 percent after Lehman Bros. upped its rating on the company to "strong buy" from "accumulate" and set a $100 price target.
The broker said it expects the company to start making larger dollar commitments to start-ups. See Net Sense for more on Safeguard.
Deutsche Banc Alex. Brown analyst Andrea Williams Rice initiated coverage with a "strong buy" rating and a $70 price target.
"Safeguard offers its partner companies financial, operational and strategic assistance that can accelerate a company's development, increasing the likelihood of reaching critical mass faster than other companies," said Rice.
Safeguard shares closed up 9 at 59 1/2 on Friday.
Teflon |
