PartyGaming advisers get £54m fee pot - Sunday 12th of June 2005
ADVISERS to next week's £4.7bn stock market flotation of internet poker giant PartyGaming could pick up a bumper £54m in fees.
The float, which has been boycotted by American investment banks on the grounds that internet gambling is illegal in the US, is by no means a cinch to get away. That is reflected in the underwriting fees being charged by the seven European banks.
The selling shareholders - the company is raising no new money through the flotation - have agreed an underwriting scale that gives the banks a higher fee the better they do with the issue.
Potential investors are said to be pushing for the price to be cut, reflecting the political risk in the US. Led by Deutsche Kleinwort Wasserstein, the underwriting banks are Bayerische Hypo-und Vereinsbank, Calyon, Commerzbank, Enskilda Securities, ING and Mediobanca-Banca di Credito Finanziario.
The main sellers are founders Anurag Dikshit and Ruth Parasol, her husband Russ DeLeon and marketing director Vikrant Bhargava. Others are Nitin Jain and Bonita Ventures.
The underwriting banks will receive 2.5% basic commission but can earn a further 'non-discretionary incentive fee' of up to 0.8% if certain 'criteria as to valuation, timing and after-market performance' are met. There is also a 'discretionary incentive fee' of 0.5% that can be paid by the sellers if they so decide.
That takes the potential maximum underwriting fee up to 3.8% of the issue. One of the criteria is certainly that the issue gets away at the top price in the 111p-127p range. Another is probably that there is no delay on the final pricing of the offer a week today.
With a minimum of 782m shares being offered, the underwriters should make £37.7m if they hit the top end of their targets. They would pick a further £5.6m if the whole of the over-allotment option of 115m shares is also successfully got away. These costs are being met by the selling shareholders and not by Party-Gaming.
It says total fees of £11.5m will be split between accountants BDO Stoy Hayward and lawyers Freshfields Bruckhaus Deringer in England and Hassan in Gibraltar, from where Party-Gaming operates. Sizeable fees will also be earned by lawyers to the flotation Linklaters and PR group Financial Dynamics.
A gamble for the brave?
THEY call the stock market the world's biggest casino, but for some potential investors, buying shares in PartyGaming is a gamble too far. Some want the float price of between 111p and 127p (equivalent to £4.4bn to £5.1bn) to be cut. And well they might, if a worstcase scenario from Morgan Stanley analysts is to be believed.
They claim the ease with which competitors can come into the market, the tricky problem of online poker's legal status and falling profit margins could leave the shares worth only 35p each. However, its 'bull case' for the flotation, in which none of those risks materialise, suggests the stock could be worth as much as 373p.
Other news from around the same time
Governments can become addicts, too - Sunday 12th of June 2005
I can’t help but notice how quickly the city of Detroit became addicted to the money the three cas....
Gaming industry braces for another hurricane season - Sunday 12th of June 2005
Tourists traveling crowded U.S. 90 along the casino-dotted Mississippi Gulf Coast are greeted by a t....
Legislature still split over slot machines - Sunday 12th of June 2005
More than a month after they adjourned without agreement on how to regulate slot machines in Broward....
Church to get back its gambled money - Sunday 12th of June 2005
An order of priests plans to reimburse St. Alphonsus Catholic Church after an audit discovered a fel....
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....
More Than $53,000 Found At Two Alleged Gambling Houses - Sunday 12th of June 2005
The Lincoln County Sheriff's Department has found more than $53,000 at two alleged gambling houses i....
Gambling study welcome but 'very limited' - Sunday 12th of June 2005
Welfare provider Anglicare has criticised the scope of a new study into the impact of gambling in Ta....
City reaches deal to sell Old Reno Casino to buyers of Fitzgeralds - Sunday 12th of June 2005
Reno officials have negotiated the sale of the Old Reno Casino, along the downtown railroad tracks, ....
Regulators' merger questioning unusual - Sunday 12th of June 2005
There were a lot of people shifting in their seats during last week's regulatory hearings to vote on....
Gamblers blow R10bn as casinos hit jackpot - Sunday 12th of June 2005
South Africans blew R9,9bn gambling at casinos, on the horses, bingo and limited payout machines in ....