The world's biggest online poker company, PartyGaming PLC, made a solid debut in its first day of trading Monday, gaining an overall value of some 5.2 billion pounds (US$9.5 billion; euro7.9 billion).
Shares in Gibraltar-based PartyGaming opened at an offer price of 116 pence (US$2.12; euro1.75) on the London Stock Exchange, valuing the company at 4.64 billion pounds (US$8.46 billion; euro7 billion). By the end of trading, the share price had risen to 129 pence (US$2.35; euro1.95).
It was one of the biggest listings on the London Stock Exchange in the past five years. The price was almost certain to propel the company, which runs the partypoker.com Web site, into the FTSE 100 index.
Chief executive Richard Segal was delighted by the response of British and European institutions to the flotation.
"The listing will reinforce the group's position as one of the world's leading online gaming companies and enhance the group's profile as we seek to expand internationally," Segal said.
The flotation involved selling 20.6 percent of company shares to institutional investors in Britain and the rest of Europe. A staff shareholder scheme accounts for 5.6 percent of shares with the rest remaining in the hands of the company's four founders - Anurag Dikshit, Ruth Parasol, Russ DeLeon and Vikrant Bhargava - PartyGaming spokeswoman Juliet Clarke said. There are 4 billion shares in the company in total, she added.
Full trading in PartyGaming shares will start Thursday, when ordinary investors anywhere in the world will be able to buy stock in the company, Clarke said.
Analysts had expected an offering valuing the company at closer to 5.5 billion pounds (US$9.9 billion; euro8.3 billion), given the boom in the worldwide online gaming market - of which PartyGaming estimates it has a 55 percent share.
PartyGaming said the price tag, struck after its advisers consulted more than 200 institutions around Europe, "is the basis for a realistic assessment of PartyGaming as an investment opportunity."
Concerns about efforts by U.S. regulators to clamp down on online gambling appeared to have a dampening effect on the price.
PartyGaming derived 87 percent of its revenues in the first quarter of this year from the United States, where the Department of Justice maintains that online betting is banned by federal law.
PartyGaming acknowledged in its prospectus that it relied on U.S.-based payment processors, including credit card companies.
"Any action by U.S. authorities that has the effect of prohibiting or restricting PartyGaming from offering online gaming in the U.S. ... could result in investors losing all or a very substantial part of their investment," the prospectus said.
The U.S. General Accounting Office has estimated there are 1,800 Internet gambling operations. Virtually all of them are based outside of the United States, posing an enforcement problem for U.S. authorities.
The popularity of online poker has surged in recent years, with credit going to interest from younger and female players who might not be allowed, or feel comfortable, in casinos.
The partypoker.com gaming room has attracted more than 1 million users since it was set up in 2001. Customers pay a type of commission known as rake to play against each other on individual tables of up to 10 players or in tournaments.
The attractiveness of the Internet gaming industry was underlined by the flotation of Empire Online, which markets mainly gambling Web sites. Its shares were placed at 175 pence (US$3.18; euro2.65) Wednesday to value the company at 512.4 million pounds (US$931.8 million; euro776.5 million).
Online poker generated about US$553 million of PartyGaming's revenue in 2004, helping it to notch up annual pretax profits of US$371.7 million, against US$89.2 million a year earlier.
The company, which also operates the online gaming sites starluckcasino.com and partybingo.com, began its institutional roadshow Wednesday to market the shares in Britain and Europe.