Friday 19 January 2018

Betfair 'likely to raise €256m' in public offering

British Internet gaming site Betfair is likely to raise at least £226m (€256m) in its initial public offering, three people familiar with the talks said.

The banks managing the sale have orders at or above the middle of the price range for all the stock available, said the people, who declined to be named because the information is private. The company is offering 18.1 million shares at £11 to £14 each.

A price at mid-range would value the company at 13.2 times its estimated earnings before interest, tax, depreciation and amortisation for 2011, one of the people said.

The median ratio for Betfair’s peers including IG Group Holdings and Paddy Power Plc is 7.6, according to a research report sent to potential investors by Goldman Sachs, one of the IPO managers.

Betfair is selling initial shares at a premium to other online betting firms as its patented exchange system will allow the company to benefit more from an expanding global Internet gaming industry, Goldman Sachs analysts said.

A spokeswoman for Betfair in London declined to comment. Morgan Stanley, Barclays and Numis Securities are also managing the IPO.

Sales growth

Betfair, founded in 1999 by Andrew Black and Edward Wray, is the largest online betting exchange in the world, processing more daily transactions than all European stock exchanges combined, according to Goldman Sachs.

Sales at Betfair rose 13pc to £340.9m in the year ended April 2010, while Ebitda fell 24pc to £53.5m, it said.

Betfair is estimated to increase revenue by 16pc annually in the three years through 2012, while Ebitda may climb 39pc a year, Goldman Sachs said, adding that regulation of the online betting industry in the US and Europe could pose a risk to growth.

The company lost a European Union court challenge in June, to Dutch rules blocking it from opening its website to gamblers in the Netherlands.

“Betfair is a premium model and it has done well,” said Execution Noble Ltd’s Geetanjali Sharma.

Risks remain as “the entire sector is under pressure from the changing regulatory environment,” the London-based analyst said.

Betfair will have a market value of as much as £1.48bn after the IPO, which will make the stock eligible for inclusion in the FTSE250 Index, the company said in a statement on October 7.


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