Friday, September 02, 2005

Second Gibraltra online gaming group to go public

by Peter Schirmer

Cassava’s new face “888” is expected to top a $1-bn valuation when its shares go on sale in October

In a move that is expected to raise at least one billion US dollars, the Gibraltar-based cyberspace and on-line gaming company Cassava – the second biggest on the Rock with some 350 local employees - plans to float on the London Stock Exchange later this year.

Cassava, the name under which the gaming group has operated out of its head office in Europort, will disappear and instead “888.com” – the subsidiary which operates the group’s most successful on-line casino - will become its new public face.

Analysts in Britain value the company at somewhere in the region of £700 million, it is understood and between a quarter and slightly less than a third of the company’s shares will be offered to institutional investors before the company goes public in October.

In the current climate of enthusiasm for Internet gaming – which is seen as one of the major growth areas for investment – any offer is likely to be snapped up.

The decision to take Cassava/888 public followed consultations with the Gibraltar Government, the gaming regulator Tim Bristow and senior partners of the local international law firm Hassans, it is understood. Both the Chief Minister Peter Caruana and the regulator were supportive of the move and gave it the green light.

The move follows that earlier this year of the world’s biggest on-line poker operator Party Poker, which is also based in Gibraltar and which floated so successfully earlier this year that its share capital qualified the gaming giant for immediate inclusion in the Footsie 100 index of Britain’s top blue chip companies.

However, though it is also a major operator and as one of the world’s most popular online gaming companies has traded profitably over many years, Cassava/888 is unlikely to emulate its bigger rival in the Stockmarket Stakes.

The public offer – which should see handsome, eight-figure personal gains for the company’s founders and other of the current small handful of shareholders - will help to enhance further 888’s profile, brand recognition and credibility, a spokesperson for the company claimed yesterday.

“It will provide 888 with a currency which can be used for acquisitions and to recruit, retain and incentivise [sic] management and employees. The offer will also establish a partial exit for shareholders,” John Anderson, the chief executive officer of the company told me yesterday. And he added that yesterday’s announcement marked “an important step in our goal to become the market leader in the global online gaming entertainment industry and will enable us to increase further our brand profile, recognition and credibility.”

“Apart from our leadership of the industry during the last eight years, the key to our outstanding growth has been our in-depth knowledge and experience of the industry and our members.

We understand what our members want – we have diversified our offering of products, to ensure a comprehensive selection of gaming activities and we currently support 11 different languages for Casino-on-Net and have members in over 150 different countries. Most importantly we provide members with a secure and trusted environment in which to play.”

The company has more than 20 million registered member accounts in over 150 countries and operates games in 11 languages, while its on-line casino has popular brands which include Casino-on-Net.com and ReefClubCasino.com.

Approximately 55 per cent of its net gaming revenue comes from the US and the balance from the rest of the world.

Last year the on-line company’s gaming revenue fell just short of $178 million, leading to an operating profit of $42.8 million and $41.1 million profit after tax - with most of the tax presumably paid into Gibraltar’s coffers.

In the first six months of 2005, gaming revenue passed the $123 million mark and if the pattern of earlier years continues it should double this figure by year end while pre-tax profits should come close to $50 million.

Shares sold under the Offer will be made available to institutional investors and certain others in the United Kingdom and elsewhere outside the United States by the selling shareholders, which are expected to include family trusts and certain members of 888’s management team.

The company employs 790 people located in four countries with the Gibraltar team – the head office, main operations arm and call centre – accounting for just over 350 of these. Others are employed in Israel (handling marketing and software development), Antigua (where there is a supplementary call centre) and the UK’s local marketing operations.

The company also announced yesterday the appointment of Marie Stevens, as its non-executive chairman. She served as a member of the UK’s Gaming Board between 1999 and 2003 and acted as general counsel for the Hilton Group (formerly the Ladbroke Group) from 1987 to 1997. Her appointment “underlines 888’s commitment to operate its business in compliance with the highest regulatory and ethical standards,” the Chronicle was told.

Related Links and Articles:

Gibraltar Online Poker Rooms - Listings in My Gibraltar Directory

Gibraltar Government new Gambling Legislation Consultation Paper PDF Format (Not draft Bill)

01 July 2005 - Investors turn online Poker firm into retail giant

20 June 2005 - Gibraltar Government to push new Gambling Laws by Autumn

18 March 2005 - Online casino 888.com plans float

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