The Maryland-based company's initial public offering (IPO) comprised 3.7 million shares, representing 24.4 per cent of its share capital, and raised around US$40 m. Shares began trading on the Swiss New Market at SFr20.90, up from an IPO price set at SFr19. They ended on a high of 21 francs. The market is expected to be less volatile than it was for other Internet IPOs in the heady days characteristic of the beginning of the year. A source close to the deal said: 'If (e-centives) had been done in February it would have come out at about SFr120 francs.'

The present IT industry market's mood is one of caution, and this is reflected in the Nasdaq Composite Index, which has fallen around 31 per cent from its peak in March. Philip Sundquist, technology analyst at Clariden Bank, said: 'the sentiment toward the Internet, and particularly pure Internet plays is still cautious.' Consequently, he explained, 'companies now have to have a path to profitability - P2P - they need to say when they are going to break even, and they need to inform about their cash burn rate.'

Clariden is a private bank within the Credit Suisse Group, which was part of the syndicate which brought investment firm New Venturetec public in 1997. New Venturetec is headed by Swiss venture capitalist Peter Friedli, one of the first investors in E-centives, who said 'being able to do a successful IPO anywhere speaks for the company.' He stated that the majority of the shares were placed with institutionals. The venture investors will hold approximately 50 percent of E-centives after the IPO.

E-centives was also the first IPO underwritten by lead manager Swissfirst Bank AG, and is the sixteenth company on the Swiss New Market, a division of the SWX Swiss Exchange. Robert Wyss, product manager at the SWX, commented on the current market: 'I would say investors are more careful now. The valuation is also more conservative.'

Founded in 1996, E-centives renders junk mail redundant by providing online direct marketing services which allow retailers to target potential consumers through a network of partner web sites. It has 15 partners and around 200 merchants. The firm's chief operating officer, Mehrdad Akhavan, estimates that US consumers receive around 543 items of unsolicited mail a year and that the response rate is about one per cent. By using the Internet, retailers can stem their direct market expenditure and increase efficiency.

Four years on the company is still making a loss but, together with its IPO and the fact that E-centives began earning revenues in 1999, with first quarter 2000 revenues at US$1,042 million compared with U$740,305 for the whole of the previous year, this looks set to change. Profits now depend on how quickly E-centives can expand its database of clients, currently totalling in excess of four million. The firm has agreements with over 150 vendors who purchase access to its number-coded member base, but it aims to expand on this number. Further plans to increase profits include expansion into Europe and possibly extending its services to mobile phone users.