IPOs on Internet may lift Lombard

Brokerage allowed to sell winery's stock in online auction

April 09, 1999|By Bill Atkinson | Bill Atkinson,SUN STAFF

Lombard Securities Inc.'s business could get a boost from the growing number of initial public offerings that are being done over the Internet.

The Baltimore-based brokerage firm was one of three brokerage houses in the country allowed to sell stock to investors in Ravenswood Winery Inc., which held a public auction over the Internet and begins trading today.

The offering "will give us national recognition, it will certainly boost sales and increase the volume of assets under our control and help us recruit brokers," said William Socha, Lombard's chief operating officer.

Shares of Ravenswood, which is based in Sonoma, Calif., were priced yesterday at $10.50 a share. The company sold 1.1 million shares and raised $11.6 million in the offering.

Socha said Lombard has received as many as 70 inquiries from prospective clients interested in Ravenswood and in participating in "Dutch auctions" over the Internet. The auctions are directed by San Francisco-based W. R. Hambrecht + Co., which underwrote Ravenswood's offering.

Hambrecht + Co. is breaking the conventional rules on how companies are taken public. The firm is run by William Hambrecht, the founder and former chief executive of Hambrecht & Quist LLC, which is known for taking Apple Computer Inc. public.

Hambrecht's mission is to give all investors the opportunity to buy shares of companies that are going public by using the Internet.

Typically when a company goes public, small investors are excluded because shares are purchased by a select group of brokerage houses that offer the stock to their best customers.

But Hambrecht has opened the door to all investors who want to bid on the stocks through an auction.

Under Hambrecht's open auction, investors place bids, specifying the number of shares they want and the price they are willing to pay. The investors can place their bids over the Internet or telephone after opening an account at one of the authorized brokerage firms.

An offering price is determined based on the lowest price at which all shares can be sold.

Investors who made bids above the offering price receive the shares they have asked for, while those who bid below the offering price get none. Investors who bid at the offering price receive a portion of the shares they have requested.

"It is a pretty big deal for us to have access," Socha said.

Lombard is a full-service brokerage firm that was started eight years ago by a group of brokers who left Baltimore-based Baker Watts & Co., shortly before Washington-based Ferris & Co. bought the firm.

Lombard has 100 offices across the country, and employs about 100 brokers, including seven in Baltimore.

Pub Date: 4/09/99

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