Betfair confirms London listing
CEO tells eGaming Review trading could commence in October " confident float will be a success despite other companies struggling in 2010.
Betfair has outlined its plans to float on the London Stock Exchange (LSE) valuing the company at £1.5bn. If the float goes ahead it would position the world’s largest betting exchange in the FTSE 250 Index.
Betfair’s IPO has long been the subject of speculation in the industry. It was reported earlier this month that the egaming exchange was poised to “press the button” on its floatation. Betfair’s CEO David Yu told eGaming Review that the company expects to commence trading before the end of October.
The IPO is expected to comprise the sale of a minimum of 10% of existing shares to institutional investors in the UK and elsewhere. The company said it would not raise any new money and not offer any primary shares for sale. There are 14 major investors holding 75% of the company. Betfair said more than half of this group were likely to participate in the share sale. A further 600 shareholders, who own around 25% of the company, will also be given the opportunity to sell stock.
“This industry is moving very quickly, so a listing will give us greater flexibility to react to wherever the industry goes,” Yu told eGaming Review. “From a regulatory and licensing standpoint, having the transparency and improved profile and reputation of a public listing can only be helpful as we continue to expand. It allows us to attract and attain new talent and gives flexibility and liquidity to our shareholders. It’s absolutely the right thing to do for the business. We believe that we can grow the business faster as a public company than a private company.”
A number of businesses, including online grocery company Ocado, have struggled with floatations this year. Ocado saw its share price fall dramatically despite cutting back the price of its shares when debuting on the stock market.
However, Yu said he was confident the floatation would be successful. He told eGaming Review: “We have 10 years of double digit growth, we think we’ve got a really killer product and we’ve got unique and sustainable competitive advantages. We’re not raising capital, we don’t have shareholders who are pressurising us for a listing, and we’ve been profitable for most of our history, so I think shareholders will always be interested.”
The planned listing on the LSE will enable founders Ed Wray and Andrew Black to sell some of their holdings in the company. They launched the business 11 years ago and own a combined 24% stake in the firm.
The full-year results ending 30 April showed that revenue grew by 13% over the year to £340.9m with EBITDA of £53.5m. A trading update for the first quarter of the current year ending 31 July revealed that Betfair’s core business increased its revenues by 22% to £86.3m with sports betting revenues rising by 24%.
Betfair’s core business is its Betting Exchange, along with other sports betting products, casino games and poker. Betfair also owns 73.5% of the financial spread betting platform LMAX and has invested in horse racing wagering business TVG in the US. LMAX is due to launch in the last quarter of 2010 and Yu said he expects it will “provide us with great future growth”.
Edward Wray, chairman of Betfair, called today’s announcement “a landmark” in Betfair’s history, which has been characterised by “extraordinary innovation, success, growth and profitability” since its launch 10 years ago. “Becoming a publicly listed company will provide Betfair with the heightened profile and enhanced transparency that will help us cement our long-term relationships with customers, regulators and business partners around the world,” he added.