Going Offline: RedChip Buys DigitalOffering For Broker License, Not Internet Stock Sales
By RAJIV VYAS
Newport Beach-based DigitalOffering Inc., which formed in early 2000 to conduct online stock offerings, has been sold, for undisclosed terms, to Spokane, Wash.-based RedChip Cos.
Don’t look for RedChip to revive the dream of offering investors an online crack at IPOs and other investments, though. RedChip grabbed the company for its stock brokerage license, according to Gordon McBean, DigitalOffering’s president.
With the acquisition of DigitalOffering, RedChip now acquires a fully functional broker/dealer, McBean said.
McBean said he plans to stay on at DigitalOffering for the next few months and then step down.
RedChip, part of ICM Asset Manage-ment, acquired DigitalOffering from majority owner McBean. Aliso Viejo-based FreeRealTime.com Inc., which filed for bankruptcy protection in May, also owned part of DigitalOffering.
In August, FreeRealTime also sold its RedChip.com Inc. unit to ICM, which then formed RedChip Cos.
RedChip.com specializes in research on small publicly traded companies.
The DigitalOffering buy cuts the leg work for RedChip. According to McBean, it would have taken months for RedChip to try and get broker/dealer approval in 50 states. For the time being, he said, RedChip isn’t likely to launch any online offerings.
McBean, who was an investment banker with Irvine-based Pacific Summit Securities, started DigitalOffering. He’s now a consultant with Newport Beach-based Roth Capital Partners LLC.
As part of FreeRealTime, DigitalOffering sought to market online IPOs and stock placements to customers of the stock data Web site. In turn, FreeRealTime took a stake in DigitalOffering.
“We had a broad marketing arrangement with FreeRealTime,” McBean said.
DigitalOffering also set up alliances with Roth Capital and Los Angeles-based Jefferies & Co., whereby the two regional investments banks would have done offerings through DigitalOffering’s Web site. That never happened because of the poor market for public offerings.
“We decided not to launch the site,” McBean said.
DigitalOffering was dealt another blow when FreeRealTime,its main financial backer,filed for bankruptcy.
“I ran the company as long as I could with my own funds,” McBean said.
In May, McBean said he realized that he needed to find another buyer for the company.
“The business model disappeared with the market and with FreeRealTime filing for bankruptcy,” he said. “(DigitalOffering) was no longer a fundable project.”
