|
Datek skips IPO, for now
|
 |
May 25, 1999: 8:43 a.m. ET
Online broker taps private investors, including Paul Allen, for $300M
|
NEW YORK (CNNfn) - Datek Online Holdings put off a near-term initial public offering Tuesday after attracting $300 million in private funding from such business luminaries as Microsoft Corp. co-founder Paul Allen and French entrepreneur Bernard Arnault.
The Iselin, N.J.-based online brokerage said the investor group -- which included Vulcan Ventures, an investment firm run by Allen, and TA Associates, a private Boston-based equity investment company -- gained an undisclosed minority stake for their investments.
Arnault, Allen and TA Associates will each gain a seat on Datek's expanded nine-member board, and each will play a role in future strategic partnerships, Datek President Edward J. Nicoll said.
"We've managed to finance our growth internally up until now, but about three months ago, we decided to look around for partners that would have significant financial impact but also provide possible strategic partnerships" down the line, Nicoll said.
While he said a future partnership with Microsoft wasn't "part of the stated long-term goal" of his investment, Nicoll said his firm was looking to "manage the transition from narrow to broad-band cable."
"We certainly look forward to working with Mr. Allen," he said. Allen remains a director at Microsoft, according to the company's proxy statement.
The announcement comes just one week after the U.S. Securities and Exchange Commission censured the fast-growing firm for various financial improprieties, including mixing customers' money with Datek's own.
Nicoll said that while the private investment wouldn't preclude an initial public offering at some point, he would "be surprised if that happens in the near future."
According to several published reports, Arnault, chairman and chief executive of luxury goods company LVMH Moet Hennessy Louis Vuitton, put up roughly half of the $300 million. Datek does not currently have any operations in Europe.
Datek, rated as the country's fourth-largest online brokerage in terms of market share, canceled an earlier IPO last summer.
Company officials said they intend to use the proceeds from the investments to expand marketing efforts, upgrade technology and hire new personnel. 
|
|
|
|
|
 |
|
