Betfair eyes deals amid rumours of flotation

James Moore,Deputy Business Editor
Monday 24 August 2009 00:00 BST

Betfair has called in Credit Suisse to advise on a potential deal boom in the gambling sector. Experts predict that the US ban on online gambling could be lifted in as little as a year by the Democrat-controlled Congress with the backing of President Barack Obama, who is a keen poker player.

It is expected that this will lead to a boom in mergers and acquisitions in the run-up to legalisation as companies seek to position themselves to enter the world's biggest gambling market.

Betfair – as the world's largest betting exchange – is closely watching the situation and wants the advisers to hand so it can swoop if necessary. While betting exchanges have proved controversial, Betfair has managed to overcome resistance to enter several overseas territories, notably Australia.

Rumours that the company could be poised for a £1.5bn float have also been growing after its well-received results a fortnight ago. Betfair reported revenues up 27 per cent at £303m in the year to April 30 while earnings grew 29 per cent to £72m. But while the company reviews the situation and the option is very much open, yesterday managing director Mark Davies said talk of an imminent move on to the stock exchange was "highly speculative".

The company is still 25 per cent owned by its two founders – Ed Wray and Andrew "Bertie" Black – while Japanese bank Softbank holds a similar amount and management and private-equity investors own the rest. Softbank's buy-in at £355m in April 2006 valued the company at £1.5bn. Industry rumours have suggested that Softbank is keen to realise its investment, and a flotation would allow it to do that. However, the company could also find a strategic investor or tap its existing shareholders for fresh cash should it need to do so.

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