Playtech on London IPO trail?

There was intense interest focused on the possibility of turnkey provider Playtech going after a London listing this week following speculation and an interesting article in the Israeli business press.

The article speculated that notwithstanding the slowdown in internet gambling share prices following Party Gaming's (owner of Party Poker and Starluck Casino pessimistic opinion on the poker market a month ago, its principal shareholder Teddy Sagi was keen to list.

As previously reported, Playtech has been holding discussions with UK capital market financial advisors to examine various options, including an IPO. It is claimed that PlayTech's shareholders prefer an IPO.

Word in the City is that the company expects to go public in November, but a PlayTech spokesman denied the rumours, claiming that the company has no plans for an IPO before the end of 2005. It could be that Playtech is waiting for the dust to settle on Party Gaming's pessimism, perhaps monitoring the recent IPO of 888.com (Casino on Net) and other online gambling companies before committing itself.

The Israeli press story included some interesting inside detail on Playtech, and claims that its IPO could exceed the GBP 195 million market cap achieved by veteran turnkey provider Cryptologic, a much respected company in the industry.

PlayTech was reportedly founded in 2000 by NAV New Age Investments Ltd., controlled by Sagi and three 30-something entrepreneurs from central Israel, with current PlayTech VP marketing incumbent Elad Cohen as CEO. NAV was delisted from the Tel Aviv Stock Exchange (TASE) in 2003.

The other two founders are said to be Amnon Ben-Zion and CEO Rami Beinish. Ben-Zion and Cohen met during their compulsory military service in the Israeli Defence Force central processing unit. Ben-Zion sold his PlayTech stake a year ago.

The article reports that a valuation for PlayTech conducted for NAV in late 2002 found that NAV owned 68 percent of the company, Elad Cohen 19 percent, and the other two founders 6 percent and 7 percent, respectively. PlayTech was valued at $18.4 million, after deducting debts, a figure that now seems unlikely. The valuation was carried out for a failed attempt by Sagi to obtain capital for the company by issuing 10 percent of its capital to an external investor. The valuation indicated that PlayTech had $4.5 million in revenue in 2002, and an operating profit before financing expenses of $1.5 million.