32Red.com plans to raise £25m in flotation

32Red.com, the online casino group, will raise about £25m in new capital next month when it becomes the latest internet betting company to float in London.

Set up by a former Ladbrokes director, Ed Ware, and based offshore in Gibraltar, 32Red.com is set to be worth £100m. In contrast to some other recent floats in the sector - most notably PartyGaming, whose four founders pocketed the entire proceeds of the float and cashed in on almost £1bn - none of the shareholders will sell any shares.

Mr Ware, who quit his job as head of Ladbrokes' international division in 2000 to set up 32Red.com, has a 36 per cent share in the business but is not intending to sell down his stake. "The float is about raising money to invest in the business and our growth plans, and not about raising money for shareholders," he said yesterday.

Mr Ware believes that investors will be attracted to 32Red.com's unique UK focus. Most of the large companies in the sector that have come to market attract the majority of their customers from the US, where internet gambling is illegal.

PartyGaming's road to flotation was dogged by concerns about US legislation and the company had to slash its valuation to secure support. 32Red.com is 85 per cent UK focused, with the rest of its business focused on Europe and the Far East. Mr Ware's background at Ladbrokes, a home-grown betting company, is also likely to curry favour with investors.

The company is on course to see its profits treble over the next 12 months, rising from about £2m this year to £6m in 2006, reaching £12m by 2007.

Established only three years ago, it already commands a share of about 5 per cent of the UK online casino market. Barclaycard operates its customer payment services and its technology partner is Microgaming, one of the world's biggest gambling software providers.

"We have come to the point where we can carry on growing organically or we can try to accelerate things. We decided we wanted to get out there and float," Mr Ware said.

The money raised will finance an increased marketing spend in the UK and acquisitions. Another major shareholder is David Fish QC, a long-standing family friend of Mr Ware. The rest of the business is owned by its other directors and staff.

Investor roadshows for the float will begin in the next two weeks, with the issue of new shares expected early next month.

Cassava Enterprises, the owner of 888.com, is expected to be next on the float schedule, with its investor roadshows set to begin once 32Red.com has got away. Numis, which successfully floated the Empire Online business this summer, is handling the 32Red.com float.