Fleet Financial Group Inc. is considering
hitching a ride on the Internet IPO rocket, saying Thursday that
it might spin off its Suretrade Internet brokerage unit.
Fleet said its fast-growing Suretrade unit would turn a
profit in the first quarter and, to maximize shareholder value,
it would consider a public offering or joint venture.
"Obviously, we've seen a lot of these Internet stocks take
off," said Fleet spokesman Charles Salmans.
No timetable for making a decision has been set.
Launched by Quick & Reilly in late 1997, just before the
discount brokerage was acquired by Boston-based Fleet, Suretrade
boasts 250,000 customer accounts, including 45,000 opened in the
last quarter. About 11,500 trades are executed daily and
customer assets exceed $1.1 billion, Fleet said.
Internet industry analysts value online brokerage stocks at
anywhere from $2,000 to $10,000 per account, according to
Salmans, meaning Suretrade could theoretically be worth $500
million to $2.5 billion, "a pretty wide range," he said.
Analysts were intrigued.
"You bury Suretrade within a big banking corporation, it
isn't likely you're going to get a valuation as rich as you
would get with Suretrade trading by itself," said Kevin Timmons
of First Albany brokerage house. "With the valuations you can
get right now, it would be silly not to look at it."
Diana Yates of A.G. Edwards agreed: "They're not going to
get the full benefit if it's within a bank ticker symbol."
Analysts wondered whether a Suretrade spin-off might
cannibalize Quick & Reilly's brokerage business, but Salmans
said that less than five percent of Suretrade customers have
done business with Quick & Reilly.
Suretrade customers tend to be young, active traders with
smaller accounts, he said. While the average Suretrade customer
is 34 years old, the average Quick & Reilly online trader is 43
and the average Quick & Reilly customer who uses a broker is 53,
Fleet also expects its Quick & Reilly/Fleet Securities Inc.
unit, which includes the discount brokerage, to post record
profits in the first quarter, "up strongly" from the same
period a year ago.
Fleet shares rose 69 cents to close at $44.625 on the New
York Stock Exchange.