Betfair float set to value business at £1.5 billion

Online sports betting firm Betfair is planning to float on the stock market in a move which is expected to value the business at as much as £1.5 billion.

The planned listing on the London Stock Exchange will enable founders Ed Wray, a former JP Morgan Chase trader, and Andrew Black, who dropped out of university and became a professional gambler, to sell 10 per cent of their holdings in the betting exchange company which they launched 11 years ago.

Their combined stake of 24 per cent in the company, which they launched with only 60,000, would be worth around 360 million although the pricing of the float has yet to be confirmed.

The size of the flotation would put Betfair into contention for a place in the FTSE 250 Index if it goes ahead.

As well as the founders, most of the other 12 main shareholders in the company, who together own 75 per cent of the equity, are expected to sell part of their stakes. A further 600 shareholders, who own around 25 per cent, will also be given the opportunity to sell stock. No new shares will be issued in the offer.

Wray, 42, said the flotation would be a landmark for the company.

"It will provide Betfair with the heightened profile and enhanced transparency that will help us cement our long-term relationships with customers, regulators and business partners around the world," he said.

Betfair claims to be Europe's largest online sports betting operator, with about 2.5 million registered users. It acts as a betting exchange, matching individual betters to each other. Users can choose the odds at which they want to place a bet and on whether an outcome - such as a football team winning a match - will happen or not. Betfair makes its money by charging commission, between 2 per cent to 5 per cent, on a customer's winnings.

The group, which is licensed to operate in the UK, Australia, Malta, Italy, Austria and Germany, also announced yesterday that revenues grew 13 per cent to 340.9m in the year to 30 April, although pre-tax profits fell to 17.8m from 47.5m due to heavy investment in the business.

The company processes on average more than five million transactions a day on its betting exchanges.

Betfair claims that in 2009 it offered on average 24 per cent better odds than other online gaming companies on UK horse racing, and 9 per cent better odds on matches for the top five European football leagues.