epo.com investors jump into eo.com

BancBoston, Catalyst Fund Management & Research, Catella IT, Marshall Wace, Shore Capital, Trident Capital and Zebank are some of the institutional investors in epo.com that have swapped their shareholding for one in eo.com. eo.com bought its rival epo.com in an all share transaction for an undisclosed amount on December 13. The price was GBP1.50 per share.

It is not clear what the shareholdings are post merger although NewMedia SPARK and those connected to it have a considerable interest in the newly merged business. Officially NewMedia SPARK’s holding in eo.com was around four per cent prior to the takeover of epo.com, however NewMedia SPARK’s founder and chairman Tom Teichman held a 17 per cent stake in eo.com and Michael Whitaker, NewMedia SPARK’s chief executive officer, owns 14 per cent.

Ola Lauritzson started epo.com in 1998 and later that same year a small capital injection was made by Lauritzson’s friends and family. It was not until February this year that a total $12.5 million capital injection, designed to expand the business across Europe beyond its existing bases of Sweden and the UK, was received. That funding round was led by Catalyst Fund Management & Research, which took a stake of around nine per cent for $3.1 million, and was to be followed by a further funding round from existing investors of approximately e5 million in November this year. Lauritzson notes that this funding round was shelved in favour of escalating talks with eo.com.

Ola Lauritzson, the chief executive of epo.com, is to join the board of eo.com as marketing director. One of his key tasks will be to build eo.com’s database of European investors to exceed its current level of 175,000.

Both epo.com and eo.com offer a broking service that enables individual retail investors to participate in online IPO and pre-IPO financings. It is not clear which brand name will be retained. While the epo.com name has higher recognition among the retail investor community, eo.com is thought to have stronger relations on the institutional side of the business.

Competition is hotting up in the online broking world in Europe – the US has for a long time been competitive – aside from epo.com and eo.com there are offroadcapital.com, goforequity.com and Wit Capital Europe, although the latter aims to be a full service online investment bank. Wit Capital Europe was intending to reach retails investors through a share dealing service that it had developed for First-e. First-e is an Internet bank owned by Enba, which owns around 40 per cent of Wit Capital Europe’s share capital. Enba is an Irish Internet incubator of financial services businesses that started operations in 1998. Wit Capital Europe’s retail share distribution plans may be off kilter now that it has fallen out with Enba. As a result of this fall out, Wit Capital Europe has laid off half its staff and aims to buy Enba’s shareholding back.