Have you already digested the astonishing numbers of Playtech Cyprus Ltd.’s (LSE:PTEC) IPO? If not, you are invited to reread the report on the first day of trading in the share in between comparing the election exit polls on Channels 1, 2 and 10. If you have, you can try to roll on your tongue the name of the next hot thing in online gambling: PokerStars.
PokerStars operates the world’s second largest online poker site. Two months ago, it hired UK investment bank NM Rothschild & Sons to examine a possible flotation or sale. The company’s value was estimated at $2 billion at the time.
The sale alternative has apparently been dropped, and PokerStars is channeling efforts towards an IPO on the London Stock Exchange. Sources in the City estimate that the company’s value for an IPO, if one is held, will be $2.5-3 billion, making it a member of the billion-dollar club of online gambling companies. Other members of this club are Israel’s 888 Holding plc (LSE:888) ($1.3 billion), Partygaming plc (LSE:PRTY) ($8.9 billion), Sportingbet plc (AIM:SBT) ($2.7 billion), and Playtech (exactly $1 billion at the moment).
PokerStars is controlled by Israelis, or at least former Israelis. The controlling shareholders in the company are the Scheinberg family of Canada, and Pinhas Shapira, an unknown businessman who reportedly resides in Tel Aviv. They apparently own 75% of PokerStars, with the rest held by senior company managers and employees.
PokerStars reportedly makes an annual profit of $150-200 million, which would reflect a p/e ratio of 13, assuming a market cap of $2.5 billion and a profit of $200 million. Sources inform ''Globes'' that the company recently tried to hire new Partygaming CEO Mitchell Garber before he accepted his new post.
A week ago, Partygaming announced the appointment of Garber, who replaced Richard Segal. Garber previously served as chairman of FireOne Group plc (AIM:FPA). Floated in June, FireOne provides payment services for the online gambling industry. Its current market cap is $300 million.
If PokerStars is focusing efforts towards an IPO, the timing is no coincidence. London’s primary market for online gambling companies has been booming of late, exemplified by Playtech’s IPO. Besides Playtech, Excapsa Software plc (AIM:XPC) recently made its IPO. The company develops software for operating online gambling sites. Excapsa has a market cap of $375 million.
Published by Globes [online], Israel business news - www.globes.co.il - on March 29, 2006
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