TD Bank's Waterhouse, Online Brokerage, Files for US$1 Bln IPO
TD Bank's Waterhouse, Online Brokerage, Files for US$1 Bln IPO
Washington, April 30 (Bloomberg) -- Toronto-Dominion Bank's TD Waterhouse Securities Inc., the second-largest online brokerage, filed for a $1 billion initial stock offering amid investor enthusiasm for shares in Internet companies.
The U.S. unit of Canada's fifth-largest bank by assets filed with the U.S. Securities and Exchange Commission to sell common shares. TD Waterhouse didn't disclose how many shares it plans to sell or how much it hopes to get for them.
The proposed offering comes as interest in low-commission online stock trading soars among investors, along with shares of publicly traded Internet brokerages.
Online stock transactions rose 49 percent during the first quarter, when investors opened 1.2 million new accounts, according to recent figures from U.S. Bancorp Piper Jaffray. Shares of Ameritrade Holding Corp. have risen to more than 8 times their price at the end of 1998. E*Trade Group Inc.'s shares have almost quintupled during the same period, and Charles Schwab Corp. shares have almost doubled.
TD Bank shares have risen more than 50 percent so far this year on the New York Stock Exchange, and have benefited from investor anticipation of an IPO by the online unit.
TD Waterhouse said it will use about two-thirds of the proceeds from the IPO for working capital and other general corporate purposes, including investments in technology and systems upgrades. Other proceeds will go for advertising and marketing and for possible acquisitions.
In addition, TD Waterhouse said it would use about $106 million of the proceeds to repay money owed to TD Bank, and may use some money to redeem shares of preferred stock of its subsidiaries held by TD Bank.
TD Bank said in January it was exploring a public offering of its global brokerage businesses, in a move that could provide stock to use as currency for acquisitions.
Its decision follows similar moves by U.S. rivals amid enthusiasm by investors and consumer demand for online trading. Donaldson, Lufkin & Jenrette Inc. last month announced plans to sell a tracking stock to reflect performance of DLJ Direct, its online brokerage unit. Fleet Financial Group Inc., the eighth- largest U.S. bank, has said it's considering a spin off of its Suretrade online brokerage.
TD Bank shares fell 7/16 to 53 7/16 in New York Stock Exchange trading, and fell 1.10 to 77.85 in Toronto trading.
NYSE/AMEX delayed 20 min. NASDAQ delayed 15 min.
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