• 888.com lowers its flotation price following fears of slowdown

September 16, 2005 - Online casino 888.com yesterday made a deep cut in its flotation price in the face of investor scepticism towards online gambling prompted by rival PartyGaming's warning last week of a slowdown. 888.com said it would price its shares to give a market capitalisation of £546m to £715m. It previously indicated it would seek a price of about £800m. Rupert Faure Walker, investment banker at HSBC, sponsor to the float, said the cut was directly a result of the warning from PartyGaming that caused a rout among share prices across the sector. "PartyGaming's share price has come back by a third. Sportingbet [owner of Paradise Poker] has also come back. That's the reason," Mr Faure Walker said. "If it hadn't been for that we would have got a higher price than the indicative range." 888.com tried to distance itself from PartyGaming's troubles by insisting it had seen no evidence of the supposed downturn in online gambling. That strong statement on current trading helped to generate a modest rally among quoted operators yesterday. PartyGaming rose 5%, Empire Online 8% and Sportingbet 11%. 888 said its poker operations, where its Pacific Poker website is a direct rival to PartyGaming's market leader Party Poker, had enjoyed a 226% increase in revenue in the first half of this year. It added that July - the point when PartyGaming said the slowdown began - had not seen a noticeable shift. Its poker revenues in July and August were roughly one-third above the average of the first six months of the year, 888 said. "Based on trading since June 30 and the outlook, the directors' expectations remain unchanged for further growth and market share gains by its poker business," the group said. 888 added that revenues in its online casino, which represents 65% of its income, were up 14% in the first half. Chief executive John Anderson said it was "very encouraging" that July's and August's numbers were both higher than the first-half averages; those months are the height of the holiday season and traditionally produce weaker numbers. The lower valuation will still crystallise the multi-million fortunes of 888's founders. Avi and Aharon Shaked own 70% of the online casino company and are to sell a quarter of their stake through the flotation. At the midpoint of the pricing range, they will reap £110m in cash and be left with a shareholding worth about £330m. 888's final flotation price will be announced ahead of the start of conditional dealings on September 29. Retail investors will not be able to trade in the shares until October 4.

> Read the full story here Source: Guardian.co.uk

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