ENBA, the Dublin-based Internet financial services company, has confirmed that it is considering selling a stake in the firm to US investment bank Paine Webber.
Meanwhile, in a separate development, The Irish Times has learned that US Internet giant eBay has chosen Enba's banking arm, First-e bank, to provide some banking services.
The deal is likely to extend significantly Enba's customer base.
An Enba spokesman confirmed only that the company was "currently engaged in business discussions" with Paine Webber. "Enba has made no decisions concerning possible funding options and is also in discussion with a number of other potential investors. Until discussions are finalised, the company cannot comment further on these matters," he added.
Paine Webber is reportedly interested in taking a stake in Enba as part of its strategy of trading expertise and market access with Internet finance groups.
It is understood the investment is likely to be at least $20 million (€19.6 million), and could see Paine Webber assist Enba in adding brokerage services to its Firste Internet bank. In October, Wit Capital, the US Internet investment bank, took a 12 per cent stake in Enba in exchange for $31 million of Wit shares.
In September, Enba secured a second round of private equity funding totalling €45 million. The company said its three new investors were Capital Z Financial Services Fund II, LP, the world's largest financial services focused private equity fund; CGU, Britain's largest life and general insurance group; and Morgan Stanley International, part of Morgan Stanley Dean Witter, the US financial services firm.
Other investors include Intel, Apax Partners and Vertex.
The deal with eBay could be regarded as a coup by Enba, because it has the potential to extend its customer base from its 30,000 users to the eight million people who trade everything from tractors to gemstones on eBay sites worldwide.
The deal initially will cover eBay's fledgling European market, but is likely to be extended to the US - territory that First-e and other divisions of Enba are eyeing.
First-e, licensed under Banque d'Escompte of France, says it is en route to being the first panEuropean Internet bank. First-e now has more than 30,000 customers in Britain, so far its sole area of operation.
EBay, a household name in the US, is "the world's leading e-commerce site", according to Mr Michael Van Swaaij head of its European operations, noting that its sales exceed those of Amazon.com Inc.
EBay does not disclose how much each of its operating regions contributes to total transactions, which amounted to $730 million in the three months ended September 30th.
The firm entered Europe in June with a German site, adding a British site in late October. Mr Stephan Kurgan, of First-e said that if an arrangement ensued with eBay, it would be "more than co-marketing. There will be some integration between the banking and the auction sites, to make it easier for eBay customers to settle their transactions".
Mr Van Swaaij said to expect "innovative arrangements" that went beyond merely allowing participants in online auctions to pay for their purchases directly from an Internet banking account. He declined to elaborate. eBay Europe may offer discounts to users of a preferred credit card, as its parent has, but he said eBay's emphasis was on service enhancements, not gratuities. He also emphasised that eBay itself had no interest in entering the banking business.
The banking alliance will first be tested in Britain early next year, and later extended to eBay in Germany, Australia, and, maybe, the US, Mr Van Swaaij said.
Enba is involved in another marketing alliance, which, conversely, draws a US entity into Europe. Wit Capital Europe, a joint venture with New York investment bank Wit Capital Group, will introduce brokerage services in Britain. This week, Enba could not supply an exact date. The plan is for Dublin-based Wit Capital Europe to become a pan-European virtual investment bank.
Mr Van Swaaij said eBay had few potential banking partners to consider because most banks have old technology systems, which are not as flexible or as quick as eBay wanted.
