PartyGaming PLC debuts UK trading at US$8.46B, closes up 12%

[playersare]

LONDON (AP) -- Shares of PartyGaming PLC, the world's biggest online-poker company, made a solid debut in their first day of trading Monday, gaining 12 percent on the London Stock Exchange.

Shares in Gibraltar-based PartyGaming opened at an offer price of 116 pence ($2.12) on the London Stock Exchange, valuing the company at 4.64 billion pounds ($8.46 billion). By mid-afternoon, the share price had risen to 130 pence ($2.37).

Earlier this month, PartyGaming announced it planned to sell shares at between 111 pence and 127 pence ($2.01 to $2.30). Some analysts blamed the lower-than-expected range on investors' fears about a clampdown on online gambling in the United States. PartyGaming, which runs the partypoker.com Web site, derives more than 80 percent of its income from U.S. gamblers.

Analysts had expected an offering valuing the company at closer to 5.5 billion pounds ($9.9 billion), given the boom in the worldwide online gaming market -- of which PartyGaming estimates it has a 55 percent share.

Still, it was one of the biggest listings on the London Stock Exchange in the past five years. The valuation was almost certain to propel the company into the FTSE 100 index, Britain's most closely watched stock index.

Chief Executive Richard Segal was delighted by the response of British and European institutions to the offering.

''The listing will reinforce the group's position as one of the world's leading online gaming companies and enhance the group's profile as we seek to expand internationally,'' Segal said.

The flotation involved selling 20.6 percent of company shares to institutional investors in Britain and the rest of Europe. A staff shareholder scheme accounts for 5.6 percent of shares with the rest remaining in the hands of the company's four founders -- Anurag Dikshit, Ruth Parasol, Russ DeLeon and Vikrant Bhargava -- PartyGaming spokeswoman Juliet Clarke said. There are 4 billion shares in the company in total, she added.

Full trading in PartyGaming shares will start Thursday, when ordinary investors anywhere in the world will be able to buy stock in the company, Clarke said.

PartyGaming said Monday's offer price of 116 pence, struck after its advisers consulted more than 200 institutions around Europe, ''is the basis for a realistic assessment of PartyGaming as an investment opportunity.''

The popularity of online poker has surged in recent years, with credit going to interest from younger and female players who might not be allowed, or feel comfortable, in casinos.

The partypoker.com site has attracted more than 1 million users since it was set up in 2001. Customers pay a type of commission known as rake to play against each other on individual tables of up to 10 players, or in tournaments.

The attractiveness of the Internet gaming industry was underlined by the flotation of Empire Online, which markets mainly gambling Web sites. Its shares were placed at 175 pence ($3.18) Wednesday to value the company at 512.4 million pounds ($931.8 million).

Online poker generated about $553 million of PartyGaming's $602 million in revenue in 2004, helping it to notch up annual pretax profits of $371.7 million versus $89.2 million a year earlier.

The company, which also operates the online gaming sites starluckcasino.com and partybingo.com, began its institutional roadshow Wednesday to market the shares in Britain and Europe.




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LONDON (Reuters) - Shares in online casino group PartyGaming surged on Monday after it completed the biggest London flotation in five years, taking its market value to about 5 billion pounds ($9.1 billion).
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The over-subscribed offer values PartyGaming higher than many British household names such as British Airways and chemicals group ICI, and is the country's biggest flotation since Dimension Data floated for 6 billion pounds in July 2000, according to the stock exchange.

PartyGaming priced its initial public offering at 116 pence per share, giving a market value of 4.6 billion pounds and guaranteeing a place in the FTSE-100 index of blue-chip UK companies.

The stock traded as high as 132-1/2p before closing 11 percent higher at 129p.

Existing shareholders sold a 20.6 percent stake in the offering, which raised no money for the company itself.

Major beneficiaries include Anurag Dikshit, the group's 34-year-old founder and operations director, who reduced his stake from around 40 percent to 32 percent, as well as other senior managers and staff.

Chief Executive Richard Segal told Reuters the group would target Europe and Australia as its main areas for growth, with Asia a ``medium-plus-term'' target.

RED HOT POKER

``The reason why we're poker focused is that the group has had extraordinary success there ... as a result of that, our other products, casino and bingo, have been to a degree neglected,'' he said in a telephone interview.

``We will now be driving those businesses hard going forward, and at the same time we have got plans to introduce new products starting next year,'' added Segal, himself a keen poker player.

The pricing was just below the midpoint of PartyGaming's indicative range of 111 pence to 127 pence, and according to Segal the offer was more than three-times covered.

PartyGaming, formed in 1997, runs three main brands -- PartyPoker, StarluckCasino and PartyBingo -- and now has more than half the global online poker market.

Poker has become a big money-spinner for Internet gambling companies, which estimate the world Internet gambling market between $7 billion and $12 billion per year and with 20 percent annual growth.

The Gibraltar-licensed group has endured a bumpy ride to flotation, dogged by fears that it could lose its main market as the United States seeks to crack down on Internet gambling.

PartyGaming's prospectus warned its directors risk jail if they travel to the United States, but industry analysts said the threat of legal action from the Justice Department was minimal.

``We had a marketing director there a couple of weeks ago, and it is not going to restrict my travel to the U.S.,'' said Segal.

Analyst Greg Feehely at Altium Securities said there was minimal risk that online gambling would be banned.

``We've seen some anti-measure introduced every year for the past six years, not one of which has been a success,'' he said.

But Henk Potts, investment manager at Barclays Stockbrokers, called the risk ``considerable.''

``There will always be this black cloud hanging over them when more than 80 percent of their customers are potentially breaking the law by using their services,'' he added.

Analysts said that PartyGaming was trading at around 13 times earnings, a significant discount to rival Sportingbet, which trades on a 2006 PE ratio of 19.5, reflecting some of the risks it faces.

Founder Dikshit is set to gain around $720 million from the flotation, while co-founder Vikrant Bhargava, 32, PartyGaming's marketing director is set to earn around $200 million.

Two other major shareholders, former porn entrepreneur Ruth Parasol and her husband Russ de Leon, will net around $370 million each.

The offer consists of 781.6 million existing PartyGaming ordinary shares, prior to the exercise of an over-allotment option of up to 115.3 million shares.

[valejo]

The BBC's coverage has an interesting response from Salvation Army toward the end:

BBC Coverage of PartyGaming first day publicly traded in UK

[BradleyT]

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[solucky]

read in a german newspaper that the US-Gouverment think about a law " no credit card transactions allowed with gambling sites " would make it not easy for a fish to reload [img]/images/graemlins/mad.gif[/img] and is neteller than forbidden too ? [img]/images/graemlins/mad.gif[/img]