CitisecOnline initial public offer breezes through impact of ‘Citi’ trademark case

BY RUBY ANNE M. RUBIO, BusinessWorld Reporter Online stock brokerage firm CitisecOnline.com was unaffected in its P149.6-million initial public offering (IPO) on Wednesday amid allegations of trademark infringement of the "Citi" marks filed by international financial conglomerate Citigroup, Inc. and Citibank, N. A. While its market debut failed to lift the stock market, CitisecOnline closed 23.53% higher at P1.68 than its offer price of P1.36 for its 110 million shares offered on a primary basis. Primary shares come from the unissued authorized capital stock of a company. The first listed online stock brokerage firm offered 430 million shares at P1 apiece. "We are hopeful we can clarify things. We are taking this case seriously. But if we don’t get a favorable decision, we will continue to operate as a stock brokerage firm. There is no risk of us closing down or not serving our clients anymore. It will be just a change in name but we are confident we will be able to keep our name. If you look at our name, it is not close to Citi," Citisec-Online President Conrado Bate told reporters. The Makati regional trial court will hear Thursday both sides on the temporary restraining order petition of Citibank against Citisec-Online. Citigroup, Inc. and Citibank, N.A. has said they are "taking every step not only to protect our brand but also to prevent confusion among the public." During the listing ceremony, PSE President and chief executive Francis Lim cited CitisecOnline as the first online stock brokerage firm to go public. "Over the past years, we have seen CitisecOnline at the forefront of innovation as it is one of the prime innovators of online stock trading in the Philippines. It has developed a full array of services to allow prompt execution of trades and to empower the retail investor by providing real-time quotes, research services and reports to help customers make intelligent decisions," he added. CitisecOnline Chairman Edward K. Lee said his company’s mission is to allow every investor to participate in the stock market through well-informed decisions. Mr. Bate said bulk of the proceeds will fund working capital requirements, a significant portion of which will be used to support products such as margin financing that can double an investor’s purchasing power. The scheme will give small investors access to the market and promote trading activity for all segments of the market. The second larger allocation will be used for the continued development of technical infrastructure and for capital expenditures. This year, CitisecOnline expects to break even after posting a P2.04-million net loss in 2005. The company said it will return to profitability as it expects to serve 3,000 clients next year. "For a brokerage firm to be profitable, an economical size is close to 3,000 clients. Our revenues are two-pronged: the commission in the Philippines and Hong Kong. That is why we are able to operate and make money despite the growth stage of online trading. There is not much money being made with the size we have today but the potential is there," Mr. Bate said. Incorporated in 1999, the Filipino-owned stock brokerage firm offers state-of-the-art online tools to individuals who may not have experience in stock market trade. Also a member of the Hong Kong Exchange, CitisecOnline was granted a broker-dealer’s license by the Securities and Exchange Commission on Jan. 18, 2000. Mr. Lee said CitisecOnline had begun the development of its online platform for the Hong Kong and mainland China market through its wholly owned subsidiary CitisecOnline.com Hong Kong Ltd. Juanis G. Barredo, Citisec-Online vice-president, said the company would continue to build strong brand awareness and preference. "We are committed to educating the investing public. We have held seminars both in-house and outside events to approximately 1,000 investors nationwide," he added. --Report from BusinessWorld