Softbank quits Expander
The banking software company owns 84% of FinFin, Expander.pl's holding company, while the holding's management owns the remaining shares.
Expander.pl will use the capital raised from the deal to complete its transformation from a web-based financial products seller to a nationwide financial advisory service with advisers around the country. Kuehn said that the firm needs about €1 million to complete its plans, but refused to disclose the financial terms of the deal.
Kuehn explained that the transformation was necessary for the company's survival, especially since Expander.pl's web-based operations used to send up to 1,000 different product applications to banks per month, only to see them disappear into a black hole with prospective customers never heard from again.
Earlier this year, Expander.pl opened eight financial advisory centres in major cities, where agents act as intermediaries for banks by selling products - mainly loans - to clients. It plans to open another 12 offices by the end of 2003, as it moves to strictly face-to-face financial product sales, which produce commissions that are five times higher than those generated by online sales.
In December, the firm will also open a mutual funds supermarket both online and in its branches as part of its extended investment services.
But Expander.pl's web site will not be phased out immediately since it's an "excellent marketing tool," according to Kuehn. "It has paid for itself through advertising, so it's like a free channel for us," he said. Last year, Expander.pl generated about 75% of its revenue from selling ads on its web site.
Expander.pl has a stable stock of 150,000 registered users, most of whom visit the web site for free financial advice, although online sales account for only about 2% of the firm's overall revenue. So far this year, Expander.pl has conducted about one hundred online transactions compared to last year's 1,000.
In 2001, Expander.pl had a loss of about €2.5 million (zł. 10 million) on revenue of €503,000 (zł. 2 million). This year, Kuehn said he expected the firm to almost reach a breakeven point with revenue of more than €2.5 million (zł. 10 million), mainly due to the hefty extraordinary sale of Expander.pl's IT services group to Softbank.
Softbank invested about €5 million (zł. 20 million) in cash, loans and transactions in Expander.pl, according to Kuehn. Under the new deal, Softbank would be entitled to receive some cash from Expander.pl's business.
Like other IT powerhouses that funded Internet-related start-ups, Softbank now wants to unload its unprofitable web enterprises, including Expander.pl, to prevent further expenditures and negative results which it must declare on its books. Similarly, Softbank plans to sell the rest of its ISP service TDC Internet by the end of 2003, of which it owns 49%. Softbank sold the other 51% of the firm to TDC Tele Danmark last year for €22 million.
