The online betting company Betfair has generated enough orders from investors to cover all shares offered on the London Stock Exchange, just a day after the company set a price range for its initial public offering (IPO). Betfair said it would sell a 10% stake to public investors at between £11 and £14 ($17.50 and $22.30) per share, valuing the company at up to £1.48 billion ($2.35 billion).
According to sources, bankers working on the Betfair listing sent a message to their sales desks on Friday morning to say that the order book for the deal had been covered. The offer of around 10% of Betfair was oversubscribed after the first day of bookbuilding, which launched on Thursday.
The percentage of the stock being offered for sale is lower than usual. Newly listed companies normally have to offer 25% of their shares for sale, but Betfair is being exempted due to the diverse shareholder base it already has.
The company’s 14 largest shareholders currently hold about 75% of Betfair’s stock and have agreed to sell shares in the offering alongside Betfair’s board members and senior management team. Betfair said that Morgan Stanley and Goldman Sachs will act as bookrunners and joint sponsors for the IPO, while Numis and Barclays Capital will help solicit investors as co-lead managers.
The final IPO price will be set on October 22nd and the stock will start trading conditionally that day. Unconditional dealing will start around October 27th.
In a company press release, Betfair said, “Betfair currently has a diverse shareholder base including a group of 14 major investors holding approximately 75% of the company’s fully diluted share capital. Based on indications received to date, Betfair expects the offer to comprise the sale of shares by over half of the group of major shareholders, Betfair’s board members, and senior management team of shares representing at least 10% of Betfair’s fully diluted share capital.
The company’s statement continued, “In addition to the group of major shareholders, Betfair has approximately 600 other shareholders, and approximately 25% of the company’s fully diluted share capital is held by shareholders who have holdings of less than 1% each. These shareholders are also being given the opportunity to sell shares in the offer and their forms of instruction are required to be submitted by Noon on October 15th, 2010. Betfair does not intend to issue new shares as part of the offer. The final number of shares being sold in the offer will be confirmed prior to admission.”
Betfair, started in 2000, is the world’s largest sports exchange with about three million registered users betting on sports events and playing online poker and other games. The company was founded by JP Morgan trader Edward Wray, internet entrepreneur Josh Hannah, and professional gambler Andrew Black. Betfair has since seen revenues climb a steady 10% year-over-year, with Wray and Black now owning 23% of the company. Hannah left the Betfair Group in 2004.
As of April 30th, Betfair had seen a 13% gain in 2010 and listed its revenue at £340.9 million ($543 million).
