View Full Version : Float may see PartyGaming at $10bn

06-04-2005, 06:31 PM
AS ORIGINALLY POSTED HERE (http://www.cnn.com/2005/BUSINESS/06/02/internet.gaming.reut/index.html?section=cnn_latest)

LONDON, June 1 (Reuters) -- PartyGaming, the world's biggest online poker company, aims to float this month in what is likely to be London's biggest new listing for four years and reap millions for executives and employees.

PartyGaming said on Thursday up to 23 percent of its shares are expected to be sold in the offer by shareholders, which should make its main backer a multi-billionaire.

The operator of the PartyPoker website declined to comment on the likely size of the offer or its market value, but analysts estimate the listing could value it at $8-10 billion based on the price of Sportingbet and other valuations.

That would thrust it into the FTSE 100 share index and make it London's biggest flotation since insurer Friends Provident in 2001.

A source familiar with the deal said the offer size was likely to be about $1.8 billion, indicating the company's value will be $7.8 billion.

Market sources told Reuters on Wednesday that PartyGaming planned to price its offer by June 27.

Online poker has surged in popularity as it pulls in a wider audience than traditional casino gambling -- often women and younger players who may not have visited casinos. Better broadband access and the convenience of playing at home have also helped the boom.

Companies hosting the sites, whose cost base is relatively limited, have reaped the reward, and PartyGaming said it is benefiting from being the highest roller at the table, with an estimated 55 percent share of the online poker market.

PartyGaming said its revenues were $222 million in the first quarter this year, up 93 percent from a year earlier. Operating profit jumped 81 percent from a year earlier to $128 million.

"If you go to a land-based casino people don't want to play poker in an empty card room, people want to play where the action is," Richard Segal, PartyGaming chief executive, said.

PartyPoker and hundreds of rival sites act as host for the players. The companies play no part and take no risk in the game, but charge players a commission, or "rake."


PartyGaming, founded in 1997, said the initial public offering would provide it with a currency for acquisitions.

"This is a young business in a young industry that is highly fragmented, and consolidation is inevitable," Segal said.

"In terms of opportunities, we would look at any companies involved in online gaming, and particularly those areas we are already involved in," Segal said, adding that it would also look at companies that drive traffic to its site.

But he said he expected organic growth would mainly drive the business, continuing several years of rapid growth.

PartyGaming will not sell any new shares in the IPO, and stock will be sold by its founding shareholders.

Anurag Dikshit, group operations director, is the biggest shareholder, and his 40 percent holding before the IPO should be worth at least $3 billion. Other major backers are Vikrant Bhargava, group marketing director, and consultants Russell De Leon and Ruth Parasol.

Segal, who joined the company less than a year ago from his position as chief executive of the Odeon cinema chain, will have shares and options representing about 1 percent of the company, estimated to be worth at least $80 million.

PartyGaming said as part of the listing its owners had given 5.6 percent of the company in options to current and future employees. The options will be redeemable in 4-5 years and include options for management.

The company currently employs about 1,100 people in Gibraltar, Britain and India. It estimated the windfall would be worth two to three years' salary for the average employee.

Investment bank Dresdner Kleinwort Wasserstein will be the coordinator and sole bookrunner for the IPO.

A rash of other companies are also attempting to tap into the online poker boom, and London is attracting most of them mainly because of strict U.S. regulations in contrast to Britain, even though most players are in the United States.

"London is one of the key financial centres and also through the passing of the UK Gambling Bill it is a jurisdiction that warmly embraces gaming and online gaming," Segal said.

The IPO roadshow will not visit the United States.

Increasing competition, which PartyGaming said had driven up its marketing costs this year, is also casting a shadow over the listing. "Competition among operators has intensified and I'm sure will intensify going forward, but we are well positioned and have got some competitive advantages," Segal said.

Gaming consultancy Christiansen Capital forecast online gaming revenue will rise to $22.7 billion by 2009, from $8.2 billion in 2004, representing compound annual growth of 22 percent. It estimated that online gaming's share of the global gaming market will rise to 8.1 percent from 3.4 percent.

PartyGaming said poker accounted for 92 percent of group revenue last year, with the remainder coming from casino and bingo sites such as Starluck Casino.

06-06-2005, 04:40 AM
I would love to have some PartyPoker stock! Hop on early guys!