Mutual fund giant Fidelity Investments said on Wednesday it struck a second deal to offer brokerage customers shares of initial public offerings, this time with Deutsche Bank AG.
In June Fidelity announced a similar agreement -- the first of its kind for the investment company -- with private equity firm Kohlberg Kravis Roberts & CoKKR.UL. The new deal is with Deutsche Bank's investment banking arm, Deutsche Bank Securities Inc.
Both deals are designed to give Fidelity's institutional and retail customers a chance to buy shares in initial public offerings brought to market by the underwriters. Traditionally shares of IPOs have been available mostly to large institutional customers and difficult for retail customers to purchase.
The pace of IPOs has dropped off sharply from 2007 amid the economic downturn. According to New York data firm Dealogic, there have been just 15 U.S.-listed IPOs so far this year, raising $2.7 billion, compared with 46 IPOs in 2008 that raised $30.2 billion and 166 IPOs in 2007 that raised $37.2 billion.
But both Fidelity and the underwriters expect the pace to improve as the economy recovers. With our new Deutsche Bank alliance and our KKR relationship, Fidelity is well-positioned to offer our customers the ability to participate in new-issue equity deals as the IPO market begins to show signs of increased activity, Fidelity's Mark Haggerty said in a statement.
Haggerty is president of Fidelity Capital Markets, Fidelity's institutional trading arm. Seth Waugh, chief executive of Deutsche Bank Americas, said in a statement the deal with help the company distribute IPO shares.
Both deals include exclusivity agreements, Haggerty told Reuters, meaning Fidelity cannot strike similar arrangements with other large private equity firms or investment banks, while KKR and Deutsche Bank cannot align with other large brokerage companies.
(Reporting by Ross Kerber; Editing by Steve Orlofsky)