Analysts say Europe is primed for an initial public offering craze similar to the one that hit the United States two years ago, and E*Trade is positioning itself to cash in.
The Menlo Park, Calif.-based online brokerage on Tuesday unveiled E*Trade
International Capital, a venture that will obtain shares in European IPOs and sell them to private investors. However, only E*Trade's European clients will have access to the shares, company spokesman Aaron Grunwald said.
The unit will begin in the United Kingdom and expand to Norway, Sweden and Denmark. E*Trade, citing research from Schroder Salomon Smith Barney, said that Europe could see $185 billion in equity offerings this year.
Meanwhile, trading in the United States is flat because of a slumping stock market. Many of the online brokerages, including Charles Schwab, Ameritrade and CSFBdirect, have expanded operations overseas.
For trading companies and for most financial service companies, the way to make money is by controlling large pools of money--which usually means increasing the number of customers. To attract new accounts, many brokerages are piling up new services.
E*Trade has reported 3.3 million customer accounts and says it controls $66 billion in assets. The company operates Web sites in 10 countries.
E*Trade said it will work with several large European investment banks to distribute the IPOs, secondary offerings and funds to its clients.