Stepping up its global equity investments, Chase Manhattan Corp. said it plans to invest $100 million in half a dozen Latin American Internet companies.
Chase is making its investments through Chase Capital Partners, a venture capital unit it set up with institutional investors several years ago.
It isn't alone in its efforts. Softbank Corp., Japan's largest Internet investment company, announced this week that it plans to set up a $100 million fund to invest in Latin American Internet companies, and Merrill Lynch & Co. and Morgan Stanley Dean Witter & Co. have set up similar funds.
The planned investments come amid a boom in Internet services in Latin America and in Internet-based financial services overall.
Latin American banks are moving quickly to set up Web sites, often turning to alliances with other companies, to create business-to-business networks as well as business-to-consumer networks across a range of product lines, including financial, travel related, and retail merchandising services.
Brazil's Bradesco, for example, offers free Internet access to its customers as a way to garner more business, and Spain's Banco Bilbao Vizcaya has set up a joint venture with Terra Networks to supply a broad range of services through its Latin America banking network. A similar trend is underway in Mexico, where Banco Nacional de Mexico, or Banacci, has formed a joint venture with Avantel, a telecommunications company, and Commerce One, a U.S.-based electronic commerce company.
"The trend is toward bundling, building customer loyalty through one-stop shopping," said a Latin American banking analyst who declined to be named.
However, analysts cautioned that investing in Internet-based companies in Latin America is a longer-term proposition than investing in U.S. companies.
That's because telecommunication infrastructures in Latin America are less well developed, and a smaller percentage of the general population has bank accounts.
"There certainly is a bright future for Internet-based services in Latin America, but the near-term revenues pale compared to the long-term possibilities," said Brent Erensel, a director and head of Latin American bank research at Deutsche Bank in New York.
He added that business customers with access to fiber optic networks, rather than retail customers, are now the main focus of many banks' efforts to develop sites.
Chase has $9 billion to $10 billion worth of venture capital investments worldwide.
In Latin America, its holdings include a $5 million stake in Mercadolibre.com, an Internet company that enables customers to find retailers in Mexico, Brazil, Uruguay, and Argentina, as well as $17 million invested in Patagon.com, an Argentine financial news and stock trading site.
