Oversea-Chinese Banking Corp. (OCBC) has acquired a 10% stake in online securities broker Boom.com for $8.6 million, helping Boom postpone the day it attempts to raise funds from the public until investor appetite for internet stocks improves.
The capital injection brings the total amount Boom has raised since its inception four years ago to $22 million. Other investors include the Australia and New Zealand Banking Group, which has a 10% stake, a group of private investors including Bill Hambrecht of US online broker WR Hambrecht, JF Shea Ventures, Hong Kong's Eu family, and Boom's management and staff.
Boom plans to use the money to expand into Japan, Taiwan and Korea and to develop personal financial services such as cash management accounts, credit cards and payment facilities. The investment by Singapore-based OCBC comes as the island-state's banks are closing branch offices at record pace to focus on online banking.
"Our interest in Boom.com ties in with our eCommerce strategy to take OCBC Bank to the forefront of the eFinancial landscape," said Alex Au, OCBC's chief executive. "This complements our earlier joint venture agreement with ANZ to create Asia's premier internet bank with a regional network."
Boom's chief executive, Mark Duff, declined to reveal how many customers the brokerage has, except to say it's "in the thousands." And he declined to reveal the company's revenue or growth rate. He said 90% of its customers are based in Hong Kong with the rest scattered across Asia. Boom's customers have an average income of $50,000 to $150,000 and trade less than five times a month. The average size of each trade is $10,000, he said. Boom has about 100 employees, a quarter of whom work on developing the company's technology platform.
Duff said Boom is targetting a market of middle class Asian investors who want a greater variety of stock than local brokers can offer but can't afford products or fees charged by the big multinational brokers. It's a potential market of about 10 million people, Duff said. Boom offers investors access to stock markets in Hong Kong, Australia, Indonesia, Japan, Philippines, Singapore, Thailand and the US - or about 18,000 stocks.
Boom aims ultimately to sell shares in an initial public offering, but says now isn't the time. "Companies going for IPOs right now are probably desperate to get the cash in," Duff says.
Boom faces an ever growing line up of competitors. This year US-based TD Waterhouse, the world's second biggest online broker, launched an online Hong Kong stock investing service and Charles Schwab began online trading with wireless (WAP) phones. TD Waterhouse plans to add a link to its services to enable investors to trade in Canadian and US stocks by the end of the third quarter.
