The Party has begun...

[WildBill]

For all those that doubted it when I said Party Gaming would be worth at least $6-7 billion when it went public, here you go:

PartyGaming goes public with US$8.5bn valuation
The largest flotation in egaming history got underway this morning when shares in PartyGaming began trading on the London Stock Exchange (LSE) at a valuation of US$8.5bn.
Conditional dealing began at 7am, and already the price has jumped by 6% to 123p, as investors rushed to get a piece of one of the largest IPOs on the LSE for years.

The valuation, although lower than the firm’s targeted US$10bn, makes PartyGaming one of the UK’s largest public firms and by far the largest listed egaming company.

It is more than three times as large as Sportingbet, and at the current trading price it is bigger than both supermarket chain Sainsbury’s and British Airways.

Press coverage in the UK has revolved around the firm’s exposure to the grey US online gaming market, where Party derives almost 90% of its revenues.

Reports have questioned the legality of online poker in the US and raised concerns the US may act to legislate against online gambling, despite most experts agreeing this is highly unlikely.

And institutions appear to have agreed and ignored the speculation to invest more than US$1.6bn in the online poker firm.

“We are delighted that the IPO has received an excellent response from major UK and international institutional investors,” Richard Segal, chief executive of PartyGaming, said.

“The listing will reinforce the group’s position as one of the world’s leading online gaming companies and enhance the group’s profile as we seek to expand internationally,” he added.

The vast majority of the US$1.6bn raised will go to the four founder investors, Ruth Parasol, Anurag Dikshit, Russ DeLeon and Vikrant Bhargava, who will retain a 77% controlling share in PartyGaming.

Full trading in the PartyGaming shares will start on Thursday.

 

[wilheim]

Anurag Dikshit

:monsters-


Seriously speaking big money like this isn't spent without some intelligence behind it. which IMO is a good sign for online gambling.



wil.

 

[Dante]

thanks for the update WB..this is a good thing and IMO another chink in the armor of non regulation

 

[Woody0]

Enormous valuation when you consider that its fixed assets will be worth peanuts.

WB do you have any sense of earnings? Seems to me the P/E could be significantly below 10. Their real vulnerability is to reducedrake.com but most players these days don't even consider the tax they have to overcome to be a winning player.

 

[WildBill]

You never know about earnings, but EBITDA, the number that really counts in gaming, is thought to be on pace for about $700 million this year. That is ridiculous stuff if it happens, would be about the same as the combined EBITDA of Stations and Las Vegas Sands. LV Sands is spending more in capital investment in one building than Party may spend in the next 20 years.

Party and the others real competition isn't each other but public apathy towards poker. No one is going to roll Party they are too sharp and have too big a lead. Their share of the market probably stabilizes, but now they have a fat war chest to buy anyone with a serious chance of challenging them.

 

[ppeter]

Gross earnings of $700 mill a year? On rakes of a few dollars at a hand? The sheer volume of activity needed to generate that is absolutely amazing IMO

:monsters-

 

[ppeter]

Personally, I have no doubt partygaming will be a good SHORT someday, but not right now. Poker and stock interest is just too hot, IMO.

Things are as good for them as it will get. Soon, they will have more competition (esp. after they made a killing going public and copycats pop up), poker will probably lose some of its fad status (more problem gamblers will be created, take it from someone that lost tens of thousands playing online poker and banned himself), and regulatory concerns will suffice as horror stories make there way to the politicians, tv networks and advertisers.

 

[TTinCO]

Gross earnings of $700 mill a year? On rakes of a few dollars at a hand? The sheer volume of activity needed to generate that is absolutely amazing IMO

:monsters-

My thoughts exactly!!!!!!!!!!!!!!

 

[casinghand]

Things are as good for them as it will get.

 

[WildBill]

Gross earnings of $700 mill a year? On rakes of a few dollars at a hand? The sheer volume of activity needed to generate that is absolutely amazing IMO

:monsters-

Remember a few things. One they pay virtually nothing in taxes being domiciled in Gibraltar, a HUGE edge over companies that pay anywhere from 20-70% of winnings in gaming taxes and then all the assorted corporate taxes on profits after that. Second the model they have is so scalable its scary. Typical casino has twice as many players they need to add at least some buildings and staff. Party can get away with virtually nothing AND more players makes the site even better. Its a scary model. Will it last forever? Of course not, it levels off and maybe investors take it out on the valuation, but I think just from a cash flow perspective this business is damn tough to beat. Others might even get bigger pieces of the pie, but I would settle for this pie they have now for the next 10 years and be thrilled. I doubt they will only have this piece though so the rest is gravy.

 

[ppeter]

Wildbill, are you saying you are LONG partygaming?

 

[ppeter]

"The vast majority of the US$1.6bn raised will go to the four founder investors, Ruth Parasol, Anurag Dikshit, Russ DeLeon and Vikrant Bhargava, who will retain a 77% controlling share in PartyGaming."


Anurag DIKSHIT? :lolBIG:

I can't even begin to imagine the teasing and tormenting this guy must have gone through when he immigated to an English speaking country with a name like that. Now that he has 1/4 of 1.6 bill, + 1/4 of the remaining shares, I guess he is getting the last laugh now :howdy: .

 

[superstar]

For all bonus hunters.....

Right now party poker is giving $75 FREE...

 

[Majoot]

PRTY.L up 11% on first day of pre-trading. The real market trading will only begin on the 30 June. Will see what happens then. I have gone out on a limb here and gone very LONG on this one. Think it has legs for the mid-term 2-3 years, but only time will tell.

The papers have been saying that they have up to 70,000 active players during peak times! It's easy to see how they get to $700m with that kind of volume. Show me a Vegas casino that does that kind of volume.......

 

[WildBill]

Wildbill, are you saying you are LONG partygaming?

I don't know if I am a big bull on them, but I would say they are what analysts call a "core holding". I think you want to be in the internet space and therefore you want to have some Party in your portfolio. Others will make a bigger run, but of course be more volatile. I think Party will be relatively less volatile and part of that will come from their claims they will pay out a lot of profit in dividends. I think Party is in a good spot as well to leverage their name and customer base into other parts of the gaming business, which is a nice incremental pop to the valuation and could be important should the public's interest in poker wane a bit.