The Investment Column: eXchange

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INTERNET investors not deterred by the recent falls in Net stocks have until Sunday to register for the next arrival, They should bear in mind that eXchange Holdings, which yesterday posted its first results since floating last month, now sits below its offer price. Is eXchange cheap at 179p?

That eXchange remains loss-making in its eighth trading year is not alarming. Internet companies invest heavily in customer and brand-building. However, there is for now no exciting sales growth to lift the story.

Revenues from eXchange's online activities rose by 16 per cent to pounds 7.2m in the half year. Almost all sales come from eXweb, a website that connects independent financial advisers to suppliers of financial products such as pensions. eXchange garners 50p for every quote the suppliers give; the IFAs pay a monthly fee. Revenue growth lagged volume growth of 25 per cent in the period, because discounts kick in as volumes rise.

eXchange has 12,000 individual IFAs out of a potential 40,000 on its books. Chief executive Paul Lindsey sees growth opportunities in transforming the business from a humble information quote provider to an all-out vendor.

The way eXchange is meant to deliver the quantum growth associated with the Net is, a personal finance website targeted at "non- high net worth individuals", according to Mr Lindsey. Since June,'s users have jumped 33 per cent to 101,000.

The supposed moneyspinner here is a mortgage broking facility, emfinance. That has six lenders signed up already, with a combined pounds 1bn of lending power. eXchange plans to put the bulk of flotation proceeds towards acquisitions to beef up content.

eXchange's detractors argue will cannibalise the IFA business. This misses the point. People surely prefer to deal face-to-face, especially on something as important and complex as a mortgage or life policy. Betting on cleaning up in personal finance is risky.

That leaves eXweb, which is hardly going gangbusters. Add a little negative Internet sentiment, and eXchange holdings looks like one to avoid.