E*Offering wants investors to watch videos on the Web, but don't expect to see these clips on MTV anytime soon.
E*Offering, the Internet investment bank started by online broker
and a group of Silicon Valley investment heavies, recently began offering multimedia slide presentations, featuring speeches by company managers, in the prospectuses of companies whose IPOs it co-manages. E*Offering says it's doing its part to give individual investors greater access to information about newly public companies.
The E*Offering initiative is a move in the direction of bringing pre-IPO roadshows, previously open only to institutions and analysts, to individual investors. But even as the
Securities and Exchange Commission
supports broadening the audience for roadshows, and is currently working on a
proposal to provide greater access to IPO roadshows, other investment banks aren't hopping on board yet. The road to open roadshows is still a long one.
Tucked deep into E*Offering's online prospectus for
, a medical data management company that went public on Feb. 10, was a link called "Meet the Management," a presentation using
Internet broadcasting and slide show tools. Investors who found the link -- ironically, E*Offering couldn't publicize it until Tuesday, when the company's quiet period lapsed -- discovered a 20-minute presentation given by XCare.net's management, which summarized key information in the prospectus.
"One of our tenets from the beginning was to level the playing field in the capital markets arena," says E*Offering executive VP of marketing and products Phillip Whalen. "We want retail investors to be able to access the same kind of information and research, and be able to make the same kind of informed investment decisions that institutions have been able to."
But that doesn't mean investment banks will rush to emulate E*Offering. Whalen admits it's a bit of a hassle to get clearance to make such a presentation available, involving approval from the SEC, the lead manager of the deal and the company. "It's a three-step approval process," says Whalen. "We're working with the SEC so that we would be able to do this whenever we choose and at the discretion of the offering company."
E*Offering currently has one other company, which Whalen couldn't mention as it is in its quiet period, which has the "Meet the Management" feature on its Web site. Investors will have to search prospectuses of E*Offering-managed new issues for the words "Meet the Management" to spot the feature. And to be sure, the multimedia presentation isn't as good as the real roadshow, where attendees can hold actual discussions with real, live managers.
Other investment banks, meanwhile, aren't rushing to offer their own multimedia quasi-roadshows. While some already broadcast password-protected Internet roadshows through NetRoadshow and sites like
, it will take some time before the kinks relating to completely open roadshows are ironed out.
"That's something that the SEC and the
have to get more comfortable with, because without their blessing, there's potential liability for us as underwriters," says a lead manager who asked not to be identified. "There may be a subtle turn of phrase that may be misconstrued and someone might come sue us."
The SEC, meanwhile, is moving forward at its own pace. A proposal to expand access to IPO roadshows "is expected sometime this spring," spokesman Chris Ullman says.
"It's been a priority of the commission to expand the audience for roadshows and allowing them on the Internet," he continues. Until then, investors will be left hoping that more underwriters will follow E*Offering's lead.