Betfair - A Flotation Planned This Year?
Published: Friday, April 01, 2005 Online-Casinos.com
BETFAIR OFF TO MARKET?
Review a precursor to GBP 200 million listing?
Fast-rising Betfair P2P betting exchange is the latest focus of investment attention in the Internet gambling industry following the launch of a strategic review that has led to speculation that a flotation is planned for this year.
Major investment bank NM Rothschild has be en appointed to advise on options including a possible float, sale or refinancing. Betfair last year made pre-tax profits of GBP 13.3 million on revenues of GBP 66.7 million. Were it to be valued on a similar multiple to other gambling stocks it could expect to achieve a market value of about GBP 200 million.
However, the company's success and growth potential mean it is likely to fetch far more if it is floated. That would provide substantial windfalls for founders Andrew Black, a former City trader, and Edward Wray, a former investment banker, both of whom own about 15 percent.
The company dominates the betting exchange market and recently strengthened its board with the appointment of Yahoo! executive Fru Hazlitt as a non-executive director. No timetable has been set and Betfair has yet to decide on which of the three options is the most favourable.
Founded five years ago, Betfair acts as a middleman between gamblers, matching people who want, for example, to back a horse to win with people who are prepared to "lay" the horse to lose.
It generates revenue by charging its members a commission on their winnings. The service has enabled punters to get much better odds than using traditional bookmakers as well as allowing them to act as bookies by laying horses and the outcomes of other events.
In November the company took a significant financial hit from bailing out punters with the collapsed betting exchange Sporting Options.
During the Cheltenham National Hunt Festival Betfair announced its highest yet peak usage with 1.08 million page requests in a five-minute period and 12,714 calls taken in one day.
A Betfair spokesman said the company could not comment on "market rumours".
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