Investors in Betfair, including co-founders Andrew “Bert” Black and Ed Wray, have agreed to sell a combined 23% stake in the online betting exchange to Japanese internet conglomerate Softbank for £355m.
The investment values Betfair at £1.54 billion, 67 times last year’s operating profit and 30 times this year projected earnings. The deal also increases Betfair\’s net cash position from £80m to £125m, as about £45m will be invested directly in the company via new shares.
“Some of the smaller people who have a significant chunk of their wealth in the business will see a spectacular return,” said Tim Bunting, Betfair\’s Chairman. “If you were an investor in the first round, you made 130 times your money. So obviously some of the smaller shareholders have decided to treat themselves.”
The founding partners, Black and Wray, have both sold just under 2 per cent of the company. This leaves the pair with a combined 26 per cent of the business.
Elsewhere, analysts at Citigroup suggested cash-rich Paddy Power could become the target of private equity interest or invest the EUR 58 million in net cash of its balance sheet in an acquisition.
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