Fidelity takes stake in W. R. Hambrecht

The mutual-fund giant joins a growing group of backers pouring cash into the online investment bank.

2 min read
Fidelity Investments acquired a minority stake in W.R. Hambrecht & Company, an online investment bank founded by legendary industry leader William Hambrecht.

The investment will help W.R. Hambrecht level the "investing playing field," said Hambrecht, the co-founder and former chief of securities firm Hambrecht & Quist.

W.R. Hambrecht also plans to use investments to fuel its growth.

Founded in early 1998, W.R. Hambrecht, has received a total cash infusion of $50 million by several investors over the past few weeks, including Reuters Group's Instinet, Novell, and American Century, another mutual fund company. W.R. Hambrecht also received an investment from ePartners, the new media equity arm of Rupert Murdoch's News Corporation.

Last month, Instinet invested $20 million for an 11.4 percent stake in W.R. Hambrecht hoping to further expand its reach with Internet-based financial technologies.

W.R. Hambrecht's goal is "to change the face of investment banking by leveraging technology to create an open market system,'' said W.R. Hambrecht's chief executive Hambrecht.

Fidelity Brokerage Services plans to offer its online brokerage customers the opportunity to participate directly in the W.R. Hambrecht OpenIPO process later this year.

In February, W.R. Hambrecht launched its OpenIPO system, an electronic auction-based method of taking companies public on the Internet.

OpenIPO helps companies that are going public and its investors maneuver around the underwriters, which are the big investment banking firms that traditionally control IPO prices.

This system is nearly the opposite of what Hambrecht practiced over the past 30 years at Hambrecht & Quist, where IPO shares were mostly divided among the firm's top institutional investors and clients.

With all the investments, W.R. Hambrecht is valued at about $175 million, The Wall Street Journal reported.