Yu done it

Just one week into life as chief exec of a public company, and Betfair boss David Yu has dropped his first monumental clanger. In an interview with the Sunday Telegraph over the weekend, Yu claimed that Betfair is a "bookmaker" - a startling admission as up until now the betting exchange had angrily denied this charge.
Instead, the company always claimed to be a technology platform, which high street bookies say allows Betfair to pay "around three times less in tax and levy than traditional UK bookmakers".
Their lobbyists have all noticed this cock-up and are anxiously exploring ways to convert this open goal into a taxation victory. In fact, William Hill has just put out a press release on the Yu interview. It's title? "Betfair's Identity Crisis - just who are Yu, David?"
Very droll.

Thoroughbred float quickly looks like an old nag

In an unusual moment of SlackBelly prescience, my notional short of Betfair - the recently floated betting exchange - is looking increasingly shrewd.

Its first set of interim numbers today - already showing sluggish growth - have caused the shares to slump (again), leaving them 22% below the 1300p IPO price and 26% off the level that even some duffer like me could tell was too rich.

I had attempted to short the shares on Betfair's own financial exchange, LMAX, only to be thwarted because the new website is yet to actually take bets on individual companies.

No wonder. LMAX is part-owned by Goldman Sachs, the investment bank which apart from stuffing investors with the Betfair float is also a hero of recent IPO campaigns such as Ocado (recovering to 8% below) and Promethean World (70% lower).

Still, you'd be a fool and a communist to suggest that they didn't deserve their fees.

How flotations work...

"The great vampire squid, Goldman Sachs, has been appointed to handle [Betfair's] £1.5bn listing." SlackBelly, October 19, 2009.

"Speculation about a flotation comes up regularly. But we are not about to appoint an adviser." Mark Davies, managing director of Betfair, tells the Evening Standard, November 30, 2009.

"Betfair has selected two investment banks, Goldman Sachs and Morgan Stanley, to advise it on a £1.5 billion stock-market flotation." Sunday Times January 24, 2010.

Davies commentary suggests Betfair rift

Mark Davies, a founder of Betfair and its former managing director, has left the betting exchange to run his own communications business. But was the parting entirely amicable?
On his blog, Davies - the son of BBC football commentator Barry - reports: "It's Betfair's 10th anniversary party tonight at the HAC in the City - what I suspect will be a fabulous event given the hard work that I know has gone into it from the events team. Many Betfairians have sent me notes asking if they will see me there, but disappointingly, the answer is no: sadly my ten years as an employee fell a week short of the official celebration, so I'm no longer invited. Lucky people who joined the company this week and can attend after five days' service!" Ouch.

Another Kleinman Inclusive

"Exclusive: Betfair Gambles On Autumn Flotation ... Betfair, the online betting exchange, is targeting an autumn stock market listing valuing the company at about £1.5bn, I have learned." Mark Kleinman, Sky News, July 16, 2010.

"[Betfair] recently postponed a planned £1.5 billion stock market flotation of the business, a process that has now been put back probably until the autumn." Racing Post, July 3, 2010.

Bad bet

Yet more bad news for the embattled Betfair - the recently floated betting exchange (about which I am obsessed) and on which I took a notional short back in November.

Respected trade website Gambling Compliance is now reporting that the company is "facing the revocation of its [already compromised] license in Italy following an investigation by the country’s gaming watchdogs" - which adds to the gambling group's problems as it attempts to convince investors that it wasn't joking when it trumpeted overseas growth during its IPO.

So far Betfair's investor relations department is losing that battle badly. The shares were off another 6% today to a new low of 975p (a 25% discount to the 1300p flotation price) making this a woeful float by any standards - even those of Betfair's main sponsor, Goldman Sachs.

Betfair backs vampire squid in flotation stakes

The flotation of online betting exchange, Betfair, is a saga that has run and run. But is it now under starter's orders?
I'm told that the great vampire squid, Goldman Sachs, has been appointed to handle the £1.5bn listing...

Betting on a float

More on the planned Betfair float. Headhunters are currently compiling a list of candidates to become the betting exchange's new head of of corporate communications. Developing...

Sindy column...

August 22, 2010

SPECULATION that Betfair is on the verge of floating has been around for years, but the last whispers emanating from the online betting exchange’s advisers suggested everything could kick off as early as next month.

Want to bet? Sources close to the company now reckon that market conditions make that plan look increasingly ambitious and, in any case, I hear that finance director Stephen Morana is currently away on a long honeymoon while chief exec David Yu, chairman Ed Wray and a host of others are off on their summer holidays.

Furthermore, interviews for the group’s new head of communications continue next week – presumably to find a person to help talk up the company’s shares. That would leave the new spinner with a tight timeframe to work their notice, arrive and settle in before a September listing.

Developing, as they say.

IN MARCH, Cable & Wireless split into two separate businesses: Cable & Wireless Worldwide and Cable & Wireless Communications. Shareholders were given one share in each, with Worldwide remaining in the FTSE 100 and Communications joining the FTSE 250.

This thrilled Worldwide boss John Pluthero, who could barely resist an opportunity to wind up his former colleagues about the respective valuations. Since then, the share price of Communications has edged up very slightly, while Pluthero’s Worldwide has been forced to issue a profits warning and seen its market cap slump to the same size as its smaller sibling. It now faces almost certain relegation to the FTSE 250.

Who’s laughing now, John?

Q: Who, in 2009, said: "To be the chairman of a FTSE company, you have got to have built a reputation over 30 years. Given the current extreme volatility and difficult economic conditions, you potentially put all that at risk in a business that is bound to be different from that in which you spent your working life.''?

A: Robert Swannell, the banker who is to become the, er, next Marks & Spencer chairman.

ON August 10, investment manager Baillie Gifford decided to sell shares in Cairn Energy – triggering a stock exchange announcement that its stake had dipped below 5%. It won’t say how many it sold, which is perhaps not too surprising. Six days later Cairn shares shot up by 5%, as the company announced it would net up to £6bn by flogging most of its stake in Cairn India to miner Vedanta. A chunk of the proceeds will also be returned directly to shareholders.

A trifle embarrassing for Baillie, perhaps, as well as for Iain McLaren. He sits on the board of Baillie Gifford and Cairn Energy. It shows Chinese walls work, I suppose.

Team sheets omitted from Davies commentary

Mark Davies - managing director of betting exchange Betfair and son of footy commentator Barry - dismisses stories that the company has just appointed Rothschild to advise on a flotation.
“It's just not true,” Davies insists to the Evening Standard's City Spy column. “Speculation about a flotation comes up regularly. But we are not about to appoint an adviser.”
The freesheet seems sceptical about that response - and so it should be. What Davies fails to mention is that Goldman Sachs has already been asked by the betting group to handle the £1.5bn listing, while Credit Suisse has also been handed a spot in the starting XI.