888.com became the latest online gambling company to float on the stock market yesterday, although fears that growth in the sector is on the wane dampened its debut.
The company sold 337 million shares at 175p, near the bottom of the 162p-212p indicative price range. In initial trading, the shares jumped 5 per cent, before crashing 12 per cent to 162p. But by the close of trading they had recovered slightly to 170p, giving the group a market value of £575m.
The volatility in the shares, which were hit by hedge funds selling out of their holdings, sent jitters through the sector. Sportingbet fell 3.1 per cent while PartyGaming dropped 8.6 per cent to 87.5p. It is now 25 per cent down on its original listing price in June.
888's road to flotation was rocked by news from PartyGaming that growth in the poker market was starting to slow. Bankers for 888 were forced to cut its valuation and opt for a price at the lower end of the range to secure support.
John Anderson, 888's chief executive who made £1.6m from selling free shares he was given, said there had been strong demand from institutions for the float. "It is a volatile market but we have a diverse business across a number of countries with strong growth prospects."
With a selling price of 175p, the two sets of Israeli brothers - the Shakeds and the Ben-Yitzhaks - who founded the company, cashed in £150m from selling a quarter of their holding in the business. Their remaining stake was worth £431m last night. Aaron Shaked, a dentist by training, came up with the idea for an online casino while at a dental convention in Monte Carlo.Reuse content