Hilton looks to sell off casinos

Hilton, the hotel and gambling group, is considering the sale of its casinos division to a management team.

Ian Payne, managing director of Hilton casinos, is understood to be looking for backing from venture capitalists to fund a buy-out. Although the business is not yet up for sale, a number of venture capitalists are considering an approach. Among the parties likely to be interested are Cinven and CVC, which own the William Hill bookmaking chain. Other names in the frame are Credit Suisse First Boston, which recently expanded its Gala bingo chain with the acquisition of rival Riva, and Duke Street Capital, which owns a large amusement machine business.

Hilton's casinos contributed £12.5m to group profits in the last financial year, £9.7m of which came from the venues acquired from the recent merger with Stakis. However, the value of the business will have been boosted by plans to revive the Playboy Casino Club after a 20-year absence from London.

Hilton's casino division would be a prized asset for venture capitalists, who place a high premium on the steady cash flow it generates. A number of betting companies have passed into the hands of venture capitalists, includingWilliam Hill and Corals.

The business is also likely to attract interest from trade buyers, notably London Clubs, Rank and Stanley Leisure.

The sale of its casinos would provide evidence that Hilton's future lies in its hotels division. There is speculation that Hilton will sell its Ladbrokes gambling arm, helping fund the development of its hotel interests.