Shares in Wit Capital jumped more than 20 per cent in early New York trading yesterday after the online investment bank announced it was to acquire Soundview Technology, a larger investment bank that specialises in the technology sector.

The deal, valued at $320 million, is Wit's largest to date and highlights the growing trend of smaller internet groups taking over older, more conventional rivals.

The deal follows the $10 million (€9.5 million) joint venture agreement reached with Enba, the Dublin-based holding company for European Internet only financial services, last week to establish a pan-European investment banking firm, Wit Capital Europe.

Mr Ronald Readmond, Wit's co-chief executive, said the Soundview acquisition was "a traditional buy-versus-build decision. The two groups' combined revenues for the first nine months of this year were $125 million.

Wit, in which Goldman Sachs, the investment bank, has a 20 per cent stake, reported $12 million in revenues for the third quarter. Of that, half came from its underwriting of initial and secondary equity offerings.

In addition to its online brokerage business, Wit runs a private equity and strategic advisory operation, which is focused on traditional offline companies looking to expand their presence on the internet.

Based in Stamford, Connecticut, Soundview Technology was founded in 1979 as a research boutique and later grew its investment banking and brokerage operations. Founded in 1996 in New York, Wit Capital has been one of a handful of companies to build a brokerage and investment banking operation solely through the Internet.