Rumours of Betfair's planned flotation have been doing the rounds for months, but the peer-to-peer gambling exchange has now confirmed that it will press ahead with an initial public offering (IPO) despite the uncertain stock-market outlook.
Betfair is yet to publish pricing details, but it is suggested the business could achieve a valuation of as much as £1.5bn, which would value it at around four times sales and 28 times last year's cash profits - however, broker Execution Noble points out that profits were subdued by heavy investment in marketing and technology. Importantly, Betfair already makes a pre-tax profit, has £151m of cash in the bank, and has an international and highly scalable business based on genuinely unique technology.
The group is currently 75 per cent owned by 14 major shareholders, around half of whom are planning to sell, putting at least 10 per cent of the company up for grabs. It said the proceeds would enable it to react to consolidation opportunities in the online betting industry.
Consolidation could also be back on the agenda for Sportingbet, after it reached a non-prosecution settlement with the US Department of Justice. The online sports betting group will have to pay $33m (£21.3m) in three instalments, at the low end of the analysts' expectations and well within its current cash balances of around £35m.
"With the removal of this major regulatory concern, we view Sportingbet as an ideal take-over target", said analyst Wayne Brown at broker Altium, noting recent comments from PartyGaming that it would be on the lookout for further targets after its merger with Bwin.
