Would Betfair be wise to go public?

TAGs: Betfair, Goldman Sachs, Ian Dyson, morgan stanley

Betfair set fair to offer shares?

Betfair set fair to offer shares?

Betfair has appointed Marks & Spencer finance director Ian Dyson to its board as amid growing rumours of a pubic share sale.

Dyson, who has been at Marks & Spencer for five years, has joined the Hammersmith-based betting exchange as an independent non- executive director.

As reported here last month Betfair recently hired Goldman Sachs and Morgan Stanley to review its options, which include a possible stock market flotation.

Betfair would not be alone in opting for an initial public stock offering (IPO). The retailer New Look confirmed this week plans to raise £650 million pounds in an IPO, while Ireland’s travel provider Travelport also hopes to raise £1.2 billion in a similar move in order to cut debt.

With Deutsche Bank AG having estimated that IPOs in Europe will treble this year it would be no great surprise to see the company opt for cashing in on what has become the largest betting exchange in the world.

Betfair’s board has so far resisted the temptation to float, most recently sticking to its guns in 2005 when deciding to hold out for better value, and their patience has been rewarded by the company’s continued growth.

However, while an IPO would raise around £1.5 billion in capital, which would doubtless help ambitious plans to expand overseas, notably in a regulated US, going public is not always the best policy in the fickle iGaming market. Public companies tend to be held back by the myriad difficulties posed by sustaining shareholder value – particularly in a market that is so affected by the contrasting legal rules in different jurisdictions.

Apart from achieving extraordinary liquidity by becoming the first to effectively market the betting exchange concept (Betfair now claims to process over 6 million transactions a day from 3m registered customers), one of the principal reasons it has been so successful to date is precisely because it has remained private.

Indeed, Betfair will perhaps find that the unwieldy nature of being a public company may hinder rather than help its plans for global domination.

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