By Claire West
Betfair announced its intention to list on London Stock Exchange and to proceed with an initial public offering which will value the business at up to £1.5 Billion
Betfair has a track record of sustained revenue growth and profitability and has multiple opportunities to secure future growth based on its unique, disruptive exchange platform technology and leadership in a large and growing online sports betting market.
Betfair is the world’s largest international online sports betting provider and the world’s biggest betting community, offering a broad range of sports betting, poker and games products to more than 3 million registered customers.
Launched in 2000, Betfair pioneered online person-to-person sports betting by developing a market place (the ‘‘Betting Exchange’’) which allows customers to bet at odds sought by themselves or offered by other customers and thereby eliminates the need for a traditional bookmaker.
The Betting Exchange has fundamentally changed the sports betting market by offering customers better pricing and more choice and flexibility. This has resulted in Betfair’s customers showing greater levels of loyalty than its competitors with significantly higher customer satisfaction rates.
The Betting Exchange is based on proprietary technology which is capable of simultaneously matching large numbers of customers and transactions and provides a fully integrated real time clearing and settlement system. In the year ended 30 April 2010, Betfair processed on average more than 5 million transactions per day on its Betting Exchange(2)–more than all European stock exchanges combined.
Betfair today is separately announcing its audited results for the year ended 30 April 2010, which continue the Group’s record of revenue growth and profitability. Betfair revenue grew by 13 per cent. to £340.9 million with Adjusted EBITDA(3) of £53.5 million. This comprised Core Betfair revenue of £306.0 million and Adjusted EBITDA of £62.2 million and Other Investment revenue of £34.9 million and an Adjusted EBITDA loss of £8.7 million.
Betfair currently has a diverse shareholder base, including a group of 14 major investors holding approximately 75 per cent. of the Company’s fully diluted share capital. Based on indications received to date, Betfair expects the Offer to comprise the sale by over half of the group of major shareholders, board members and management team of Shares representing at least 10 per cent. of Betfair’s fully diluted share capital as at Admission. In addition to the group of major shareholders, Betfair has approximately 600 other shareholders, and approximately 25 per cent. of the Company’s fully diluted share capital is held by shareholders who have holdings of less than 1 per cent. each. These shareholders will also be given the opportunity to sell Shares in the Offer. No indications have yet been received from these shareholders with regard to their intention or otherwise to sell Shares in the Offer. Betfair does not intend to issue new Shares as part of the Offer. The final Offer size will be confirmed prior to Admission.
Summary information on Betfair
At the heart of Betfair is the pioneering Betting Exchange, where customers come together in order to bet at odds sought by themselves or offered by other customers, thereby eliminating the need for a traditional bookmaker. Betfair also offers a range of other sports betting products, casino games and poker. These businesses together comprise Betfair’s ‘‘Core Betfair’’ segment.
Betfair owns a 73.5 per cent. holding in LMAX, which has developed an exchange platform for online retail financial trading that has evolved from Betfair’s exchange technology. LMAX was originally established by Betfair in 2007 and has invested significant resources since then in developing its proprietary exchange, with a launch expected to take place in the final calendar quarter of 2010. Betfair also owns Betfair US, which comprises TVG (a licensed US horse racing wagering and television broadcasting business) and a development office in San Francisco. LMAX and Betfair US together comprise Betfair’s ‘‘Other Investments’’ segment.
In addition, Betfair has a 50 per cent. shareholding in Betfair Australia, a joint venture which operates a licensed betting exchange business in Australia.
Betfair has twice been named the UK’s ‘‘Company of the Year’’ by the Confederation of British Industry and has won two Queen’s Awards for Enterprise, being recognised for Innovation in 2003 and most recently for International Trade in 2008.
As at 31 July 2010, the Betfair Group employed 2,003 people, with another 143 employed by Betfair Australia.
The Betfair Group owns licensed operations in the UK, Malta, Italy and the United States and (through Betfair Australia) in Australia.