Betfair puts a £1.5bn float on the agenda

BETFAIR, the internet based gambling group, is on the brink of launching a highly anticipated initial public offering (IPO), valuing the company at £1.5bn.

It is expected that the company, which is the world’s largest online betting exchange, will announce its move within the next fortnight.

However, it is thought that details of the flotation have yet to be ironed out, including how the company will price its shares.

It is also unclear whether Betfair is seeking fresh capital to help fund new expansion plans or if investors are looking to realise their holdings.

Should Betfair go ahead with the listing, founders Ed Wray and Andrew Black, who together own a 25 per cent stake in the company, will come out as the biggest beneficiaries if they move to sell their stake.

Other large shareholders include Japan based SoftBank, which bought a 23 per cent stake in Betfair four years ago for £355m.

Similarly, Betfair’s management, including chief executive David Yu, along with staff and a number of private equity investors also own a large portion of the company’s equity.

A spokesman for the gambling group said that widespread speculation over whether Betfair would launch an IPO has circulated the market for many years. He declined to comment on the imminent flotation.

Five years ago, Betfair was on the verge of floating before the company’s board decided against it. The listing had been proposed for early 2006.

As a result, former chief executive Stephen Hill stood down from his role as a protest to the move not to float.

SoftBank’s 2006 investment into Betfair valued the company at just over £1.5bn.

Betfair, which was set up by Wray and Black more than ten years ago, allows people to bet against one another rather than a bookmaker.

In 2009, the company saw revenue grow by 27 per cent to £303m, while it generated before tax profits of £42.4m, marking an increase on 2008 when profits were £38m.

The company has a substantial presence in Australia and last year bought TVG, the American channel that screens horseracing.

GOLDMAN SACHS
GOLDMAN SACHS, along with Morgan Stanley, has been appointed as financial adviser to Betfair as the online gambling company moves one step closer to launching an initial public offering (IPO).

The investment bank first took a role at the table five years ago when Betfair mulled over whether or not it would float. It was joined at that time by Morgan Stanley.

Goldmans has advised on a raft of related deals within the leisure sector this year, although a number of its clients delayed plans to float as market conditions remained challenging.

Merlin Entertainment, operator of Madame Tussauds and Alton Towers, consulted Goldmans on its plans to launch an IPO earlier this year, which would have valued it at £2bn.

But the entertainment group owned by Blackstone pulled back on its plans in the spring.

Goldmans took a top role advising Amadeus, the travel and tourism firm on its April IPO, which valued the group at €1.36bn (£1.12bn).

The bank is likely to have been joined by legal outfit Freshfields Bruckhaus Deringer as advisers on Betfair’s latest IPO consideration.

Corporate partners Ben Spiers and Martin Taylor at the magic circle firm have remained key advisers to Betfair.

Taylor advised Betfair in 2006 when Japan’s SoftBank took up a 23 per cent stake in the company for £355m. That deal valued Betfair at £1.5bn.

Emma Sadowski