PartyGaming float in doubt as nervous City hedges its bets - Sunday 12th of June 2005

The world's largest online poker company, PartyGaming, may be forced to slash its float price before its full listing next Monday. It is still possible that the City will refuse to back the float, although that remains an outside bet.

The four owners of the company stand to share more than £1 billion if they successfully float just 21 per cent of the firm, but City fund managers are still uncertain whether to back the offering.

Most fund managers and analysts believe the firm will have to drop its price by 10 per cent, wiping off more than £400 million from the Gibraltar-based group's valuation.

There are serious concerns over the legal status of online gambling in the United States. Not only are US investment banks nervous about buying shares in the firm, but major UK institutions contacted by The Observer this weekend also indicated they were unlikely to invest in PartyGaming.

Last week, the company set a price range of 111p to 127p per share for its IPO at the end of this month, giving PartyGaming a market value of between £4.4bn and £5bn.

It could be the biggest float the London market has seen for four years. If successful, the company could enter the FTSE 100 in one leap.

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