E-Trade Group Inc., the Menlo Park, Calif., discount brokerage company, is expanding its reach to South Africa.
On Monday, E-Trade entered into a joint venture agreement with E-data Holdings, a Johannesburg Internet provider of financial services and information.
The companies are investing $15 million in the venture, which will form a company called E-Trade Africa. E-Trade will own 60% of the venture; E-data, 40%.
The venture will initially focus on the South African investment market, where there are 1.2 million Internet users, E-Trade said in a statement.
The company eventually will seek to expand into other growing markets in Africa, it said. To aid the venture, E-data is acquiring Brait Securities, the equities division of a Johannesburg investment and merchant banking company.
The big brokerage operations are increasingly looking to expand globally, said Dan Burke, a senior analyst at Gomez Advisors Inc., a Lincoln, Mass., consulting firm. "It's another way of diversifying their revenue stream," he said. "South Africa has a pretty good equity market."
In South Africa, E-Trade would be competing with the likes of Merrill Lynch & Co., which has had a presence there for several years.
Merrill is scheduled to go head to head with E-Trade and Charles Schwab Corp. on-line today, when it starts its broad Internet brokerage effort.
E-Trade already has established a presence in Japan, the United Kingdom, Sweden, France, Australia, and New Zealand, as well as the United States.
But the California brokerage is not the first North American discount broker to establish a presence in far-flung developing regions. TD Waterhouse, the discount unit of Toronto Dominion Bank Financial Group, recently agreed to take a 49% equity stake in a joint venture with Tata Finance Securities in Bombay, India.
The new company, Tata Finance/TD Waterhouse, is set to go live in January.
- Niamh Ring