The Investment Column: Take a seat at the table despite its subdued market debut

3i's a buy thanks to boom time for FTSE 100 floats; D1 Oils is one for risk-takers only
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PartyGaming was the first to play an audacious float, and potential investors fell into two camps. Either online gambling was the commercial potential of the internet coming of age, combining humankind's age-old penchant for a flutter with the accessibility of the internet. Or, as others thought, this was a flop-in-waiting - the revenues accumulating in these upstart businesses are a house of cards; the US, which considers the activity illegal, could pull the plug on the industry; or poker is no more than a passing craze.

Those naysayers are enjoying a winning streak at the moment. PartyGaming warned growth was slowing, making many investors fold. has battled on with a bad hand and the share price collapse on its debut yesterday was perhaps inevitable - but it was unwarranted. Stock market gamblers should take a punt on the new company.

PartyGaming's problems are not widely shared. It has overspent on broad-brush advertising, attracting fly-by-night players who disappear having staked only a few dollars. The global outlook for the online gambling market is still convincingly strong. Some $8bn (£4.5bn) was staked online last year, compared with $3bn in 2001, yet internet gambling is still only 5 per cent of total gambling. There many more punters to tempt online. It depends on access to the internet, of course, which is still low in many countries, but that is on the increase.

Among the top players in the sector, PartyGaming is a one product, one country business, and Sportingbet has a hefty sports-betting book that leaves it exposed if favourites have a winning streak. 888 is a better investment than either. It is not entirely dependent on the US, nor on poker.

The majority of its business in casino games such as blackjack and roulette. Such games do carry a "house" risk that big punters can sometimes take the company to the cleaners. The cost of marketing also continues to rise because competition is mounting. But it is the larger sites such as 888 that offer the best - and safest - technology who will attract the most players over the long term. 888 is one of these, and will still be a significant player in a decade and beyond.

Investing in 888 will require a strong nerve, but with its brand and its dividend prospects, it is worth getting a seat at the table.

3i's a buy thanks to boom time for FTSE 100 floats

This year is turning out to be the busiest for merger and acquisition activity since the boom of 1999-2000. With the stock market up at a four-year high, it is also proving a positive time for flotations. That means 3i Group, one of Europe's biggest venture-capital companies and a member of the FTSE 100, is in rude health.

These conditions have enabled it to raise £910m from trade sales or flotations of its investment in just the five months to 31 August. That is up from £577m in the same period in 2004. These proceeds included stakes in the foreign exchange company Travelex and the telephone directory business Yellow Brick. There is more to come: 3i owns 45 per cent of the German mortgage broker Interhyp, which floated yesterday, and a 16 per cent stake in Petrofac, an oil consultancy floating in London with a price tag of £700m next month.

The cash bonanza revealed by 3i in its trading update yesterday was more than forecast by the City, which boosted its estimates of the company's value as a result, and sent the shares up 13p to 788p, their best level in three and a half years. The stock was one of the best FTSE 100 performers yesterday.

3i is a broad-based venture-capital firm. It runs a string of big funds, in which 3i and outside institutional investors have put cash, and it invests its own money, too. It hunts for bargains amongestablished companies, backing management buyouts, as well as putting down early-stage capital for growing firms and new technology ventures. Its investments are geographically diverse, increasingly so as it pushes into Asia and China in particular. It has invested £578m in the five months to 31 August, up from £365m last year, signalling its belief that valuations are still attractive.

This all bodes well for an increase in the company's net asset value, which is the City's preferred way to judge whether 3i shares are cheap or expensive. The value of 3i's investments probably equates to about 675p per share. Many of these will be on the books at a price well below that they will fetch when sold, however, justifying the shares' premium to asset value. We said buy at 598p last year and with the global economic outlook, on balance, benign, it still seems a buy.

D1 Oils is one for risk-takers only

For environmental and, because of the high price of oil, increasingly for economic reasons, the world needs to find new and renewable sources of fuel.

D1 Oils might just be part of the solution. This is an impressive company with an impressive management, which is setting up a business planting jatropha trees, from whose seeds can be produced oil for refining. It is also trialling and hoping to install a series of local refineries to turn that crude oil into biodiesel, for which there is an established and growing demand. It has nascent operations dotted round the globe but is most far advanced in India.

This is a company that is barely three years old. Its refinery technology has been tested on rapeseed oil but not yet on jatropha. The small number of trees it has planted are only maturing now. So much can go wrong. D1's $30m (£17m) cash pile will probably not be enough to see it through to profitability. Current record diesel prices may fall back - although it would have to be pretty sharp a fall to make D1 at full stretch look uncompetitive. If you cannot afford to lose all your money, don't invest in D1, but for those with an appetite for risk, this seems a management and a business plan worth backing.

Its shares have done well since flotation last year, but fell 37.5p to 362.5p yesterday on disappointment that a project in China has stalled. Buy.