Betfair Considers Going Public
The Internet gambling grapevine had been abuzz with rumors that the premier online gaming portal Betfair was considering making a public offering of its shares. These rumors were given some substance over the weekend when leading British newspapers like the Sunday Times and the Telegraph carried articles confirming that Betfair had engaged the services of investment banks.
The Telegraph report named Goldman Sachs and Morgan Stanley as the investment banks that Betfair had appointed to advise it on future financial options. The most likely option is believed to be a listing through a potential £1.5bn flotation. This would provide the financial leverage required for Betfair to engage in some sort of consolidation in order to meet the emerging competition in the online gaming sector.
When such public listings take place the existing owners are in for a bonanza. This was borne out when online gaming leaders like Playtech and PartyGaming went public. Hence Andrew Black and Ed Wray, the founders of Betfair are in line for a “potential payout worth hundreds of millions of pounds” reports the Telegraph. The two of them together own a 25% stake in the company. The founding story of Betfair is a part of the folklore of the online gaming industry. Andrew Black met Ed Wray at a drinks party. Wray was then a derivatives banker at JP Morgan. Black outlined his idea of forming a peer-to-peer betting exchange that would eliminate traditional bookies and thereby offer bettors better odds. The rest as they say was history. Betfair was founded in 1999 and has grown to a business with over £300m in annual revenues. The Japanese bank, SoftBank holds a 23% stake in Betfair.
According to the Telegraph report Betfair, Goldman Sachs and Morgan Stanley declined to comment on this development.
