The investment banking firm, Rodman & Renshaw Capital Group, has launched DirectMarkets, a first-of-its-kind electronic transaction platform that directly links existing public company stock issuers and investors seeking to transact primary offerings of securities.
DirectMarkets will be “a game changer,” says Rodman and Renhsaw CEO Edward Rubin. “The new electronic transaction platform is the catalyst that will redefine Rodman as an innovative technology company focusing on the financial services industry.”
The mechanism will also allow publicly traded companies providing primary offerings – stock sales other than initial public offerings that have been set aside for possible sale – to do away with the largely manual transactions process that persists today.
Workflow management tools will guide participants through complex transactions. Users also will have around-the-clock, seven-day-a-week access to the DirectMarkets portal through laptops or any mobile device. This will help improve the speed and efficiency of carrying out the sales.
“We will have a competitive advantage as the platform gains transaction, and we begin the process of easing issuers and investors through the transition from manual transactions to our new automated platform,” says DirectMarkets CEO Kevin Lupowitz.
Prior to joining the new venture, Lupowitz was chief information officer of Liquidnet, the global block trading network that serves large institutions.
Additionally, in bypassing the investment banks, which make up the so-called primary market and typically mark-up stock prices, the issuing companies can realize larger profit margins of their shares while investors, who constitute the secondary market, should be able to acquire primary offerings at more competitive prices.
“By giving investors direct access to issuers to purchase primary shares, both the investors and the issuers benefit,” says Lupowitz. “Issuers are empowered to be more opportunistic as to when they sell into the market, and do so at a deep discount from traditional investment banking fees. Investors have a new, unique source of liquidity, and are able to inject capital directly into the issuer they fundamentally plan to go long in, knowing that a middleman isn't taking 5-8% off the top.”
The new trading platform will complement Rodman’s various other business activities including its market making, sales and trading, research and investment banking activities. In conjunction with the DirectMarkets launch, the firm intends to change its name to Direct Markets Holding Corp.
Rodman & Renshaw Capital Group considers itself the leader in the private investment in public equity and registered direct offering transaction markets. For the first nine months of its fiscal year, ended Sept. 30, 2011, the investment bank reported a net loss of $17.1 million on revenue of $54.4 million.