• PlayTech mulls London IPO

The company value for the issue could reach hundreds of millions of dollars (ISRAEL Business News - Globes.co.il) -- October 4, 2005 -- The slide in online gaming company shares in London apparently is not deterring PlayTech Cyprus Ltd. controlling shareholder Teddy Sagi. PlayTech develops operating and management software for online gaming sites. According to reports over the weekend, PlayTech has taken its first steps towards an IPO on the London Stock Exchange (LSE). PlayTech’s management reportedly met UK capital market financial advisors to examine various exit options, including an IPO. PlayTech’s shareholders prefer an IPO. A UK capital market sources says that the company expects to go public in November. PlayTech’s spokesman denies the rumors about a pending IPO, saying that the company has no plans for an IPO before the end of the current year. A source close to PlayTech says that the company’s management is closely following developments in the IPO of 888 Holding plc, scheduled for late this week. 888’s IPO will be the first test for shares of online gaming companies since the collapse in the share of PartyGaming (LSE:PRTY), which operates the world’s largest poker website. If 888’s IPO goes as planned, it could invigorate the pipeline of online gaming companies considering it onto the capital market. If 888’s IPO does not go as planned, i.e. if the company is forced to significantly lower the value of the issue, it could cause a postponement or even cancellation IPOs by other online gaming companies. PlayTech reportedly has an interesting story to present to investors, especially in view of its large number of customers. Online gaming industry analysts predict that PlayTech’s value could exceed CryptoLogic Inc.’s (Nasdaq:CRYP; TSX:CRY; LSE:CRP) market cap of £195 million ($346 million). CryptoLogic, a Canadian company founded in 1996 and a competitor of PlayTech, offers its customers a comprehensive online casino management solution, including payment clearing. Despite the collapse in online gaming shares, some sources predict that the value of PlayTech’s IPO could reach hundreds of millions of dollars. PlayTech was founded in 2000 by NAV New Age Investments Ltd., controlled by Sagi and three 30-something entrepreneurs from central Israel. NAV was delisted from the Tel Aviv Stock Exchange (TASE) in 2003. PlayTech VP marketing Elad Cohen was formerly CEO of NAV. PlayTech’s other two founders are reportedly Amnon Ben-Zion and CEO Rami Beinish. Ben-Zion and Cohen met during their military service at Mamram (the IDF central processing unit). Cohen started out in online pornography. He was later introduced to Sagi by common acquaintances, thereby paving the way for Sagi’s investment in the company. Ben-Zion sold his PlayTech stake a year ago. A valuation for PlayTech conducted for NAV in late 2002 stated that NAV owned 68% of the company, Elad Cohen 19%, and the other two founders owned 6% and 7%, respectively. PlayTech was valued at $18.4 million, after deducting debts, a figure that now seems ridiculous. The valuation was carried out for a failed attempt by Sagi to obtain capital for the company by issuing 10% of its capital to an external investor. The valuation indicated that PlayTech had $4.5 million in revenue in 2002, and an operating profit before financing expenses of $1.5 million. NAV was delisted from the TASE at a value of NIS 20 million.

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