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From the Racing Post
THE prospects of being able to buy shares in Betfair from as soon as next month appear to have taken a knock from the performance of other Stock Market listings in 2010.
In the absence of a commitment from Betfair on its long-mooted Stock Market flotation or froth flotation
A study reported by The Financial Times has shown that more than half of the big "initial public offerings" in Europe this year had shares trading below their issue price, leaving investors sitting on a loss.
It has led to claims that companies that have floated, such as Ocado, may have overvalued
A stock whose current price is not justified by the earnings outlook or price/earnings (P/E) ratio and thus, expected to drop in price. Overvaluation may result from an emotional buying spurt, which inflates the market price of the stock or from a deterioration in a their business and pitched the initial share price too high.
"Investors are sick to the back teeth of being treated like idiots," one asset manager told the FT.
Betfair has steadfastly declined to comment on the timing of any flotation, but leading racehorse racehorse refers usually to thoroughbred but may also include standardbred, trotter. owner and businessman Andy Stewart suggested yesterday they will be in no hurry.
At the same time, Stewart said institutional investors harboured one concern about a successful flotation - a possible increase in tax.
Preparing for such a massive sea change in the company's ownership is not without its difficulties, but thoughts that October was the favoured month for a Betfair float may need to be reassessed in the light of the post-float experience of other businesses.
Ocado, the online service that delivers Waitrose goods, was forced to cut its flotation price from 200p to 180p and, despite that manoeuvre, shares fell by 20 per cent in just over a month.
Of 31 businesses which floated across Europe since January and which raised more than $100m, 16 were trading under issue price last Friday. The FT also reported that the average performance of six launches backed by Goldman Sachs The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS) is one of the world's largest global investment banks. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street. - reported to be an adviser to Betfair - was a drop (from the issue price) of 0.7 per cent.
There have been signs Betfair is gearing up for a float. It recently launched what was dubbed its biggest marketing campaign to help position the brand as 'The World's Biggest Betting Community '.
Chief executive David Yu gave an interview to the Wall Street Journal last month in which he revealed a move beyond betting and into finance, with the launch of LMAX, a financial trading platform that will allow punters to trade on the movement of share prices without owning the stock.
For Stewart, founder of Cenkos, the broker and corporate finance adviser, Betfair fits the bill for a successful float in many ways.
"There has to be enough demand from public and institutional shareholders to make it subscribe, or it will get pulled," he said. "However, as far as Betfair is concerned, there are a number of areas where it is unique.
"For instance, it is the only realistic betting exchange A betting exchange is a peer-to-peer gambling website acting as a broker between parties for the placement of bets. The concept is similar to that of a stock exchange or a futures exchange, where in this case the commodity being traded is a bet, rather than a stock or futures and a monopolistic position to be exploited can be highly attractive to investors.
"The major concern for the institutions is whether the government will enforce legislation to make [Betfair] pay more tax. That is the big fear people have.
"A lot of people got badly burnt in the US when the government decided to clamp down [on internet betting] and threatened to put directors in jail if they set foot in the US. Share prices fell by 90 per cent."
Stewart added: "Investors like Betfair, its record and its management team, and all that is highly attractive. That said, would you want to wake up one day and the government has legislated and taxed the model so substantially it is no longer attractive? "Betfair are not in a hurry. They don't need to float, there is no debt to repay and [Japanese shareholder] SoftBank is not a desperate seller.
"So they will wait until they get a sensible valuation. Both [Betfair] founders are investment bankers and will not be frightened by an article in the FT."
THE prospects of being able to buy shares in Betfair from as soon as next month appear to have taken a knock from the performance of other Stock Market listings in 2010.
In the absence of a commitment from Betfair on its long-mooted Stock Market flotation or froth flotation
A study reported by The Financial Times has shown that more than half of the big "initial public offerings" in Europe this year had shares trading below their issue price, leaving investors sitting on a loss.
It has led to claims that companies that have floated, such as Ocado, may have overvalued
A stock whose current price is not justified by the earnings outlook or price/earnings (P/E) ratio and thus, expected to drop in price. Overvaluation may result from an emotional buying spurt, which inflates the market price of the stock or from a deterioration in a their business and pitched the initial share price too high.
"Investors are sick to the back teeth of being treated like idiots," one asset manager told the FT.
Betfair has steadfastly declined to comment on the timing of any flotation, but leading racehorse racehorse refers usually to thoroughbred but may also include standardbred, trotter. owner and businessman Andy Stewart suggested yesterday they will be in no hurry.
At the same time, Stewart said institutional investors harboured one concern about a successful flotation - a possible increase in tax.
Preparing for such a massive sea change in the company's ownership is not without its difficulties, but thoughts that October was the favoured month for a Betfair float may need to be reassessed in the light of the post-float experience of other businesses.
Ocado, the online service that delivers Waitrose goods, was forced to cut its flotation price from 200p to 180p and, despite that manoeuvre, shares fell by 20 per cent in just over a month.
Of 31 businesses which floated across Europe since January and which raised more than $100m, 16 were trading under issue price last Friday. The FT also reported that the average performance of six launches backed by Goldman Sachs The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS) is one of the world's largest global investment banks. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street. - reported to be an adviser to Betfair - was a drop (from the issue price) of 0.7 per cent.
There have been signs Betfair is gearing up for a float. It recently launched what was dubbed its biggest marketing campaign to help position the brand as 'The World's Biggest Betting Community '.
Chief executive David Yu gave an interview to the Wall Street Journal last month in which he revealed a move beyond betting and into finance, with the launch of LMAX, a financial trading platform that will allow punters to trade on the movement of share prices without owning the stock.
For Stewart, founder of Cenkos, the broker and corporate finance adviser, Betfair fits the bill for a successful float in many ways.
"There has to be enough demand from public and institutional shareholders to make it subscribe, or it will get pulled," he said. "However, as far as Betfair is concerned, there are a number of areas where it is unique.
"For instance, it is the only realistic betting exchange A betting exchange is a peer-to-peer gambling website acting as a broker between parties for the placement of bets. The concept is similar to that of a stock exchange or a futures exchange, where in this case the commodity being traded is a bet, rather than a stock or futures and a monopolistic position to be exploited can be highly attractive to investors.
"The major concern for the institutions is whether the government will enforce legislation to make [Betfair] pay more tax. That is the big fear people have.
"A lot of people got badly burnt in the US when the government decided to clamp down [on internet betting] and threatened to put directors in jail if they set foot in the US. Share prices fell by 90 per cent."
Stewart added: "Investors like Betfair, its record and its management team, and all that is highly attractive. That said, would you want to wake up one day and the government has legislated and taxed the model so substantially it is no longer attractive? "Betfair are not in a hurry. They don't need to float, there is no debt to repay and [Japanese shareholder] SoftBank is not a desperate seller.
"So they will wait until they get a sensible valuation. Both [Betfair] founders are investment bankers and will not be frightened by an article in the FT."
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