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New York, June 4 (Bloomberg) -- Wit Capital Group Inc., an investment bank that raises money for companies over the Internet, rose 65 percent on its first trading day, as investors bet on rapid growth at the three-year old company.
The New York-based firm's stock rose 5 7/8 to 14 7/8. About 15.7 million shares changed hands on the Nasdaq Stock Market. The company closed with a market value of $1.07 billion.
Wit Capital sells shares in initial offerings over the Internet to individual investors, who are ignored by most investment banks. The company helped sell shares in 80 public stock sales by mid-May; 62 were IPOs including MarketWatch.com Inc., Prodigy Communications Corp. and iVillage Inc.
''You have to look at its (upward) trajectory,'' said Randall Roth, an analyst with Renaissance Capital Corp. in Greenwich, Connecticut. Wit is participating in more IPOs and receiving more shares to sell, he said.
For 19 of the stock sales, Wit served as ''e-manager,'' which got it a mention on the front cover of the prospectus that outlines the business plans of the company offering its shares. As e-manager, Wit distributes 1 percent to 5 percent of the shares. For other IPOs its percentage may be smaller.
The company had 41,000 customers at the end of April, up from 3,100 little more than a year ago.
Wit Capital sold a total of 8.7 million shares at $9 each, raising $78.7 million. It sold 7.6 million shares yesterday at the initial sale, and an additional 1.1 million shares today when its underwriters, who include Wit, exercised their option to do so at the same price. The sale represented a 12 percent stake.
Losing Money
Like many Internet start-ups, the company faces concerns over how it will make money. Since 1996, when Wit Capital first hired bankers, the company has yet to manage a stock sale. And Wit earned little from all the deals in which it participated.
The company has until recently ''received none or negligible portions of the management fees usually paid to co-managing underwriters,'' it said in its IPO filing with the U.S. Securities and Exchange Commission. As a newcomer to the IPO business, Wit has little bargaining power to demand more fees.
Wit lost $4.9 million on revenue of $3.9 million for the quarter ended March 31. The company lost $8.8 million last year.
''Wit definitely has to diversify its revenue sources to ensure that they don't live or die by the IPO market,'' said Bill Burnham, an analyst with Credit Suisse First Boston Corp.
Wit faces increasing competition from other recently established online banking firms.
E*Trade Group Inc., the second-largest online broker, has formed E*Offering with Sanford Robertson, one of the founders of Robertson, Stephens & Co. Also, W.R. Hambrecht & Co., founded by another major West coast banker, Bill Hambrecht, is offering IPOs through an online auction.
Wit has hired senior bankers from some of the best-known Wall Street firms as it tries to play a more prominent role.
One of Wit's co-chief executives, Robert Lessin, 44, was previously a vice chairman at Salomon Smith Barney Inc. The other, Ronald Readmond, 56, was vice chairman at Charles Schwab & Co.
Hiring Bankers
Mark Loehr, 42, director of investment banking, was head of equity capital markets at Salomon Smith Barney. Johathan Cohen, 34, director of research, was at Merrill Lynch & Co. as its Internet analyst. Andrew Klein, 39, a former securities lawyer, founded Wit in April, 1996.
These are ''guys who are really seasoned professionals in the business,'' said Michael LeConey, an analyst with Security Capital Trading Corp.
In April, Goldman Sachs Group L.P. bought a stake in Wit Capital equal to 16.7 percent of its shares following the IPO, with warrants that could bring the total to 24.7 percent. The investment was one of several Goldman has made in finance-related Internet businesses.
The relationship will give Wit increased stature in the investment banking community and with corporate clients, the company said. What it hasn't done is bring Wit a greater allocation of shares in Goldman-led IPOs.
Wit received about 4 percent, 1 percent and 2 percent, respectively, of the shares in Barnesandnoble.com Inc, StarMedia Network Inc., and EToys Inc., each a recent Goldman deal. Wit received the biggest proportion of shares in the Goldman IPO that has so far fared the worst, Barnesandnoble.com, and the smallest proportion in the IPO that fared the best, StarMedia Network.
Wit Capital trades under the symbol ''WITC'' on the Nasdaq Stock Market. Bear, Stearns & Co. and Wit Capital handled the sale, with assistance from Thomas Weisel Partners LLC.
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NEW YORK, June 4 (Reuters) - Cable Web access company High Speed Access Corp <HSAC.O> raced ahead Friday, up 50 percent, while online banking services company Online Resources & Communications Corp <ORCC.O> rose 15 percent after the companies' initial public offerings on Friday.
High Speed shares were up 6 at 19 while Online Resources stock reached a high of 20-1/4, later easing slightly.
McLean, Va.-based Online Resources, which enables customers to provide Internet banking services with the ATM network as an integral part, priced 3.1 million shares at $14 a piece with the help of lead underwriter J.P. Morgan.
Randall Roth at Renaissance Capital's IPO Plus Aftermarket Fund <IPOSX.O> believes the company currently has an edge because it has access to the closed ATM network. Its system allows smaller community banks to make ATM machines more functional. Instead of simply using them for withdrawing and depositing money, customers could use them for paying bills, for example, as some of the larger banks, such as Citibank, have offered. But Roth also believes this may be a temporary advantage.
"They have access to the closed ATM network, which is an advantage. They have patents for their technology, so small banks don't have to develop expensive systems on their own," Roth said.
"The downside is that this was designed for the last generation," Roth added. "This was a good idea five years ago, but I believe the ATM network is moving toward a more open standards platform."
Roth believes that ATMs in the near future will represent a more open network with online access to buying movie tickets and such.
"I think they'll become a bit like an Internet Kiosk."
Roth believes that will diminish the company's edge and allow other Web-related companies to take a piece of the pie.
The company's main competitors include CheckFree Corp <CKFR.O> and TransPoint, as well as Edify Corp <EDFY.O>, according to Roth.
Online Resources reported a loss of $15.3 million on revenue of $2.2 million in 1998 versus a loss of $13.04 million on revenues of $1.01 million the prior year.
Riggs National Bank and California Federal Bank are two of the company's clients.
Cable Internet Access provider High Speed Access Corp also began trading Friday.
Vulcan Ventures Inc, an affiliate of Microsoft co-founder Paul Allen, beneficially owned 54.2 percent of the common stock before the offering.
"Highspeed Access is trying to be a big competitor to AtHome <ATHM.O>. I don't know how successful they will be because part of their target is the ex-urban, less populated market. And part of the strategy for that is to be early and to get agreements with cable companies. They are a bit behind AtHome and RoadRunner. It may be a tough call for them," said Steven Tuen, an analyst at IPO Value Monitor.
Network Access Solutions Corp <NASC.O> also brought its shares to the market Friday, but fell below its initial price of $12 to 11-7/8.
During midday trade it was unchanged at 12.
Web investment banking company Wit Capital <WITC.O> also opened on Friday for the first time and traded up 6-1/2 to 15-1/2 at midday.
Web software company F5 Networks Inc <FFIV.O> was also expected to open today but open for several hours. At midday, it was up 3-1/2 at 13-1/2.
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