Cassava IPO - Party Gaming statement may impact listing price
09.09.2005The London flotation of online casino and poker group Cassava Enterprises will go ahead on schedule, says a company spokesman... but the price of the listing may be weaker after PartyGaming's CEO warned of slowing growth early in the week.
Cassava spokesman Nick Lambert told the media: "The float is still totally on track. The investor education process has been getting very positive feedback."
The knock-on effect of the Party Gaming CEO's pessimistic statement that the online poker phenomenon is slowing down became more obvious as the week wore on, with some uncharitable speculation that PG was deliberately "pulling the ladder up after itself" following it's own successful listing, with the objective of cramping competitors' style.
Analysts have warned that Cassava's plans to sell shares will at the very least sorely test investors' appetite for internet gaming stocks as fears grow that the industry's near-exponential rate of expansion is cooling.
Shares of PartyGaming Plc, the online operator which competes with Cassava in poker gaming (Party Poker), fell as much as 37 percent on Wednesday after the company said revenue growth is slowing, wiping about GBP 2.4 billion ($4.4 billion) from the company's market value. Until Monday, PartyGaming shares had risen 35 percent since its IPO in June, but the stock is now trading below the offering price.
PartyGaming's valuation is being used as a benchmark for Cassava's business, bankers said. Shareholders of Cassava, who plan to sell $500 million of stock in an IPO that would value the company at about $1.5 billion, may raise less now in the offering, bankers predicted.
