Playtech , which develops software for the operation and management of online gaming sites, is set to go public on the British capital market by Passover, thereby making owner Teddy Sagi one of the richest young men in Israel. Playtech, as is known, announced two weeks ago its intention to raise almost $300 million, through various means including a offer for sale, at a company value of $960 million.
Documents that have reached “Globes” show that the offer for sale by existing shareholders will amount to $240 million, with the company itself raising $60 million. The value of the company at the IPO is expected to be in the region of $900-$980 million, with the sale offer expected to create a float at a rate of 30% of equity. Put differently, the company value before the money will be between $840-$920 million and therefore each company shareholder will sell 26% -29% of his holdings. Sagi, who according to the last company valuation conducted three years ago, holds 68% of the company, is expected to sell shares for around $160-$165 million, and to remain with a holding worth around $400-$460 million.
The documents also revealed that Playtech began the roadshow ahead of the IPO on Monday, February 27. Between this date and March 3, the company will hold a road show for investors in the US with a second roadshow for British investors set for March 6 through March 15. The company’s IPO is therefore set to go ahead during the last two weeks of March.
A relatively modest multiple
The average value for the company float is around $940 million. At present this reflects a p/e ratio based on profit estimates for this year of 13.2, which constitutes a discount compared with the multiples of the company’s competitors. One such rival, Boss Media, is traded at a multiple of 24 while another, Chartwell Technology, is traded at a multiple of 17. The average multiple for Playtech’s competitors is 17. Playtech, it should be recalled, ended 2005 with revenue of $47.6 million and a net profit after tax of $35.6 million.
The company is believed to have distributed dividends in 2005 totaling almost $13 million. It is expected to distribute $36 million in dividends this year.
Published by Globes [online], Israel business news - www.globes.co.il - on March 2, 2006