LONDON (Reuters) - Online internet betting exchange Betfair on Thursday opened books on its planned flotation, valuing the company at up to 1.5 billion pounds as its owners seek to cash in on increased investor appetite for riskier assets such as shares, with markets at six-month highs.
The company said it plans to offer shares at between 11 pounds and 14 pounds each, with some of its largest owners pledging to sell at least 10 percent of the company.
The company expects to announce a final price for the offer on October 22 and if the market debut is successful, Betfair could join London’s FTSE 250 index of mid-range stocks.
Betfair offers person-to-person betting, largely in sports. It allows customers to place bets as a punter or take bets in the role traditionally played by a bookmaker.
The company was founded 10 years ago by Andrew Black, a former professional gambler, and former JP Morgan (JPM.N) trader Edward Wray, who jointly own 22.5 percent of the business.
A banking source familiar with the transaction said the shares are being offered at a premium to similar companies.
The price range implies a valuation for the core gaming business of between 21 and 28 times forward earnings, the source said. Other gambling companies such as Paddy Power PAP.I and PartyGaming PRTY.L trade closer to 16 times, according to Thomson Reuters data.
Yet bankers hope the sale will be get fillip from improving market sentiment following a recent pick-up in European equity issuance and listings.
The announcement comes in the wake of Renault’s (RENA.PA) successful sale of 14.9 percent of its stake in Swedish carmaker Volvo (VOLVb.ST), priced at a 4.2 percent discount to Wednesday’s closing price, netting just over 3 billion euros (2.6 billion pounds) for the French carmaker.
Danish jeweller Pandora (PNDORA.CO) has also wrapped up a $2 billion (1.3 billion pound) IPO while other transactions, such as a $912 million sale of shares in German chemicals group Brenntag (BNRGn.DE) last week, also indicate growing investor appetite.
Other deals in the pipeline include an $844 million flotation by Norwegian oil and gas producer Statoil (STL.OL) of its filling station network, due to open books on Friday.
Although the Betfair offer only comprises the shares sold by the majority owners, the 25 percent of the company held by 600 small shareholders with less than 1 percent each will count towards the freefloat, the source said.
The company will not issue new shares and did not confirm how many existing shares will be sold in the offer.
Editing by David Holmes and David Hulmes