Israeli-owned Internet gambling firm raises GBP 147.7m. in IPO

888 proceeds come from initial public offering priced at GBP 1.75 a share on the London Stock Exchange.

The shareholders of Israeli-owned Internet gambling company 888 have raised gross proceeds of GBP 147.7 million from its initial public offering on the London Stock Exchange. 888 said on Thursday that it priced the offer at GBP 1.75 a share, which was in the lower half of its range of GBP 1.62-GBP 2.12 and which gave it a market capitalization of GBP 590m. Until the IPO, the family trusts of founding brothers Aharon and Avi Shaked and co-founder Shay Ben-Yitzhak owned approximately 90 percent of 888, while the management and employees owned 7%. Between them they sold 84.4 million shares, or 25% of the company, while there is also an over-allotment option of 12.7 million shares, which would net the selling shareholders an additional GBP 22.2m. The company didn't issue any new shares in the IPO. The shares were placed with institutional investors following a road show across the UK and continental Europe, after which the offer was five-times oversubscribed. Conditional dealings in 888's shares began on Thursday morning under the symbol 888, with unconditional dealings due to begin on Tuesday next week. HSBC Bank is the sole bookrunner, global co-ordinator and sponsor for the offer, while Bridgewell Securities, Numis Securities and Panmure Gordon are the co-lead managers. 888's owners aren't the first Israelis to carry out a UK listing of a company involved in the Internet gaming sector. Empire online, whose chief executive and largest shareholder is Noam Lanir, raised around $222m. in the middle of June in an IPO on the Alternative Investment Market of the LSE. Empire Online provides marketing services to the online gaming industry. 888 made a net profit of $41m. on sales of $178m. in 2004, and analysts expect it to earn $60m. net profit this year. The company plans to pay annual dividends of approximately 50% of net profit, starting in 2006. Revenue from its casino operations grew 14% year-on-year in the first half and earnings from its poker business surged 226%. The company expects growth to continue but not at the same rate.
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