Betfair founders hit jackpot with float

Steve Dinneen
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BETFAIR yesterday announced a stock market listing that is expected to value it at up to £1.5bn, braving an IPO market that sorely bruised Ocado earlier this summer.

If successful, the internet betting firm, which has seen a meteoric rise since it was launched a decade ago, would have a higher valuation than gambling stalwarts Ladbrokes and William Hill.

Analysts were cautiously optimistic about the float yesterday, despite founders Andrew Black and Ed Wray announcing they will each sell a tenth of their 22.5 per cent stake in the business. If the firm reaches the £1.5bn valuation this will give them a paper windfall of £17m each – not bad for an initial investment of just £60,000 between them.

Around half of Betfair’s 14 major investors will sell some of their stake, with a minimum of 10 per cent of the company on offer.

Chief financial officer Stephen Morana told City A.M. the firm will not experience the
same difficulties as online grocer Ocado, which was forced to slash its valuation at the
eleventh hour to rescue its IPO.

He said: “We’re putting up a small percentage of the business. Our stakeholders are committed, they are selling to help the business expand. There is no indication that they are selling to crystallise their investment.”

Morana denied the IPO could be derailed if analysts turn on the float: “Analysts have an influence over these things but investors need to make up their own minds.”

The firm also announced its full year results, which saw revenue rise 13 per cent to
£341m but profit slide to just £17.8m. The firm said investment in IT and a big marketing spend for the World Cup hit its margins.



Goldman Sachs and Morgan Stanley are acting as joint bookrunners on the float.
Heading up the team for Goldman is their global head of equity capital markets Matthew Westerman. He joined Goldman in 2000 as a managing director and was promoted to partner in 2002. Prior to joining the firm, he worked at NM Rothschild, where he was a managing director and joint chief executive of ABN Amro Rothschild for four years. He also worked in the equity capital markets department of CSFB. He graduated from Oxford University with a history degree in 1986.

Also on the Goldman team are Anthony Gutman, a star banker enticed from Citigroup, and Nick Harper.

On the Morgan Stanley side the team is headed up by Henry Stewart, the head of consumer M&A who was a key adviser for Cadbury in the lead-up to its sale to Kraft. Also advising for Morgan Stanley is highly respected managing director Peter Moorhouse and Anthony Kokinakis.

Barclays Capital and Numis are co-lead managers.