Party Poker Ipo
At 20x trailing earnings puts party poker's annual earnings (not revenues) between 200mm and 500mm not including earnings growth rate to next year. Scroll down... a guy with the last name of Dikshit will be rolling in it. ( $ not sh....). I can't believe the valuations. Imagine the asset turnover ratios even figuring that EBITDA is pretty close to revenues...I imagine the gross margins are close to 75%.
The first excerpt is from Steve Badger's website.
"Party Poker announced its active exploration of a possible initial public offering (IPO) on the same day that the Yahoo! Internet portal announced its intention to partner with peer-to-peer betting company Betfair to offer online wagering via Yahoo Betting. Separately either one of these developments would be the biggest news in the history of Internet gaming, but taken together, they mark the beginning of a new chapter in the evolution of gambling online.
Upon the announcement that Party Poker's parent, Party Gaming, might pursue a public offering on the London Stock Exchange, financial publications speculated the value of the IPO could be anywhere from four billion dollars to even as much as a staggering $10,000,000,000. That later number was based on a comparison to Sportingbet PLC. In October 2004, Sportingbet purchased the (at the time) number three online poker cardroom, Paradise Poker, for between 300 and 400 million dollars (depending on performance figures for the next year). At the time of purchase, Sportingbet traded for about 100 on the London Exchange. Only three months later, at the time of the PartyPoker announcement, it was trading at 235. (And another month later, it was trading at 306.) Since Sportingbet is trading now at about twenty times next year earnings, and PartyGaming is speculated to make in excess of 500 million dollars in the next year, that leads to the ten billion dollar number. That seems extremely high, but still, should it occur, a Party Gaming IPO should end up in the multiple billion dollar territory, which would immediately establish it as one of the 100 largest companies on the London Exchange. Formerly known as iGlobalMedia, Party Gaming is also the parent company of Starluck Casino and PartyBingo, but bingo and casino games represent a smaller part of the company's value... PartyPoker is the main piece in the company's puzzle.
Rumors also are afloat of possible IPOs on the London Exchange for Pokerstars, the #2 online poker card room, and Cassava Enterprises, the parent of Pacific Poker and the giant Casino on Net.
Links to the many mainstream news stories regarding these and other poker and online gaming financial developments are updated daily on this site's Poker News page.
LONDON (AFX) - The world's biggest internet poker company has taken steps
towards floating on the London Stock Exchange in a move which may herald further
consolidation of the global online gaming industry.
Gibraltar-based PartyGaming, which launched the PartyPoker website in 2001,
said it appointed investment banks Investec and Dresdner Kleinwort Wasserstein
to advise on its "strategic options", confirming earlier British newspaper
reports.
The eight-year-old company, which recently changed its name from
iGlobalmedia, is understood to favour an initial public offering (IPO) some time
this year.
PartyGaming's advisors are also expected to consider alternative ways of
taking the company forward, including raising debt or seeking a merger partner.
It is understood the company's five private backers are keen to cash in as
investors, attracted by a surge in the number of people gambling via the
internet on games such as poker, clamour for shares in the few listed companies.
Their decision comes after the stock of British online gaming group
Sportingbet PLC rose sharply in the wake of its 300 mln usd acquisition of
Paradise Poker last November.
Analysts expect PartyGaming to fetch a value of anywhere up to 3 bln stg.
With rival gambling group William Hill PLC, a member of the benchmark FTSE
100 index, valued at around 2.3 bln, such a large flotation would provide a
major boon to the London Stock Exchange.
IPO issuance remains at depressed levels in London, with a number of floats
having been pulled last year amid a dearth of investor appetite.
PartyGaming said Investec and DKW had been chosen because they could offer a
wealth of experience.
A spokesman pointed out that Dresdner in November advised Sportingbet on its
300 mln usd acquisition of Paradise Poker.
Earlier The Times said that despite the likelihood of a place in the FTSE
100, banks such as Merrill Lynch, UBS, Morgan Stanley and Deutsche Bank declined
the opportunity to be involved, eschewing fees of an estimated 20 mln stg.
The paper said their decision was caused by concerns that PartyGaming's
biggest market is in the United States, where the legality of internet gambling
remains in doubt.
Although poker, where players are pitched against each other rather than
against the house, is less of a grey area, the big banks are still wary of
upsetting regulators such as Eliot Spitzer, New York's attorney-general.
PartyGaming last year reported earnings before interest, tax, depreciation
and amortisation of about 350 mln usd (186 mln stg).
Earnings are projected to rise to as much as 600 mln usd this year.
Among British peers, shares in William Hill trade on a multiple of around 17
times earnings, while Sportingbet stock is valued at around 19 times estimated
2005 earnings.
An IPO would crystallise huge paper profits for the five owners of
PartyGaming.
They include Ruth Parasol, a Californian lawyer who made her first fortune a
decade ago through pornographic websites, and Anurag Dikshit, a computer
services graduate from India.
PartyGaming also has casino and bingo websites, although more than
three-quarters of its business is derived from online poker, the fastest growing
part of the gambling industry.
PartyPoker accounts for more than 50 per cent of the global online poker
market. Launched in 2001, it now claims that 12,000 people are playing its
online games at any one time.
rob.branch@afxnews.com
rhb/ab
The first excerpt is from Steve Badger's website.
"Party Poker announced its active exploration of a possible initial public offering (IPO) on the same day that the Yahoo! Internet portal announced its intention to partner with peer-to-peer betting company Betfair to offer online wagering via Yahoo Betting. Separately either one of these developments would be the biggest news in the history of Internet gaming, but taken together, they mark the beginning of a new chapter in the evolution of gambling online.
Upon the announcement that Party Poker's parent, Party Gaming, might pursue a public offering on the London Stock Exchange, financial publications speculated the value of the IPO could be anywhere from four billion dollars to even as much as a staggering $10,000,000,000. That later number was based on a comparison to Sportingbet PLC. In October 2004, Sportingbet purchased the (at the time) number three online poker cardroom, Paradise Poker, for between 300 and 400 million dollars (depending on performance figures for the next year). At the time of purchase, Sportingbet traded for about 100 on the London Exchange. Only three months later, at the time of the PartyPoker announcement, it was trading at 235. (And another month later, it was trading at 306.) Since Sportingbet is trading now at about twenty times next year earnings, and PartyGaming is speculated to make in excess of 500 million dollars in the next year, that leads to the ten billion dollar number. That seems extremely high, but still, should it occur, a Party Gaming IPO should end up in the multiple billion dollar territory, which would immediately establish it as one of the 100 largest companies on the London Exchange. Formerly known as iGlobalMedia, Party Gaming is also the parent company of Starluck Casino and PartyBingo, but bingo and casino games represent a smaller part of the company's value... PartyPoker is the main piece in the company's puzzle.
Rumors also are afloat of possible IPOs on the London Exchange for Pokerstars, the #2 online poker card room, and Cassava Enterprises, the parent of Pacific Poker and the giant Casino on Net.
Links to the many mainstream news stories regarding these and other poker and online gaming financial developments are updated daily on this site's Poker News page.
LONDON (AFX) - The world's biggest internet poker company has taken steps
towards floating on the London Stock Exchange in a move which may herald further
consolidation of the global online gaming industry.
Gibraltar-based PartyGaming, which launched the PartyPoker website in 2001,
said it appointed investment banks Investec and Dresdner Kleinwort Wasserstein
to advise on its "strategic options", confirming earlier British newspaper
reports.
The eight-year-old company, which recently changed its name from
iGlobalmedia, is understood to favour an initial public offering (IPO) some time
this year.
PartyGaming's advisors are also expected to consider alternative ways of
taking the company forward, including raising debt or seeking a merger partner.
It is understood the company's five private backers are keen to cash in as
investors, attracted by a surge in the number of people gambling via the
internet on games such as poker, clamour for shares in the few listed companies.
Their decision comes after the stock of British online gaming group
Sportingbet PLC rose sharply in the wake of its 300 mln usd acquisition of
Paradise Poker last November.
Analysts expect PartyGaming to fetch a value of anywhere up to 3 bln stg.
With rival gambling group William Hill PLC, a member of the benchmark FTSE
100 index, valued at around 2.3 bln, such a large flotation would provide a
major boon to the London Stock Exchange.
IPO issuance remains at depressed levels in London, with a number of floats
having been pulled last year amid a dearth of investor appetite.
PartyGaming said Investec and DKW had been chosen because they could offer a
wealth of experience.
A spokesman pointed out that Dresdner in November advised Sportingbet on its
300 mln usd acquisition of Paradise Poker.
Earlier The Times said that despite the likelihood of a place in the FTSE
100, banks such as Merrill Lynch, UBS, Morgan Stanley and Deutsche Bank declined
the opportunity to be involved, eschewing fees of an estimated 20 mln stg.
The paper said their decision was caused by concerns that PartyGaming's
biggest market is in the United States, where the legality of internet gambling
remains in doubt.
Although poker, where players are pitched against each other rather than
against the house, is less of a grey area, the big banks are still wary of
upsetting regulators such as Eliot Spitzer, New York's attorney-general.
PartyGaming last year reported earnings before interest, tax, depreciation
and amortisation of about 350 mln usd (186 mln stg).
Earnings are projected to rise to as much as 600 mln usd this year.
Among British peers, shares in William Hill trade on a multiple of around 17
times earnings, while Sportingbet stock is valued at around 19 times estimated
2005 earnings.
An IPO would crystallise huge paper profits for the five owners of
PartyGaming.
They include Ruth Parasol, a Californian lawyer who made her first fortune a
decade ago through pornographic websites, and Anurag Dikshit, a computer
services graduate from India.
PartyGaming also has casino and bingo websites, although more than
three-quarters of its business is derived from online poker, the fastest growing
part of the gambling industry.
PartyPoker accounts for more than 50 per cent of the global online poker
market. Launched in 2001, it now claims that 12,000 people are playing its
online games at any one time.
rob.branch@afxnews.com
rhb/ab
Comments
When you're dealing with a world market, there are trillions of dollars available. These guys were either in the right place at the right time or they were visionaries. Or both.
At a 4 billion valuation, BV/share would be, I imagine, close to 0.7 to 1 cent. Based on discounted cash flows, youre looking at (very roughly here) 4 billion for 300 million in EBITDA. Real cash flow to equity will be less b/c they probably have very few decpreciable assets, but have real interest and some taxes I assume. FCFE could be estimated at 250 million (conservatively) with a PV of 4 billion,
they are still only discounting cash flows at 6-7 % or so, which seems low based on the speculation inherent with a company like these. Of course, my calculations dont include a growth factor, which could increase the discount rate to say 10 or 12. I still think it should be closer to 15-20%
Point is, the valuation is based on relative valuation - comparing to another IPO's share value now, not at issue...which is scary because the poker mania occurring may slow down (real growth rate slower, not less popular) bringing the valuation of these companies back to earth.
Obviously.
Why exactly would they need this to be publicly traded? Ie, why would they need the extra capital? It's not like they're doing breakthrough R&D. The only reason I could fathom would be to buy out competitors...
2. Such an IPO size will give Party such immense press that will be free advertising. Think about how much press Google got when it went public. This could be bigger if it was listing on NASDAQ, which it wont be, but will still be BIG news and huge press.
I agree totally, they dont need the capital from an IPO, I dont really understand what they are goijg to do with all of it, which is worrisome. Theyre gonna have to pay a huge dividend to justify the price. This should be set up as an income trust.
with $4B more avail, who couldn't they aquire? Perhaps some of the poker rooms attached to the sports books, but any independant site (no matter how large) is a target with that kind of cash.
Then, once the bubble pops, party is left standing with an 80 or 90% share (as opposed to the 60% or so they have now).
Myself, I'm sending them an e-mail to see if they can allot shares based on the Player points. I want in on this thing!!! It should be good for a fast buck.
Cheers
Magi
you and 40,000 others.