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Last Updated: Monday, 27 June, 2005, 17:10 GMT 18:10 UK
Partygaming shares rise on debut
Online betting is legal in many countries
Shares in Partygaming, owner of the Partypoker website, have closed 11% up at 129p on their first day of conditional trading.

The firm's offer price of 116p valued it at 4.64bn ($8.46bn), the biggest UK debut in five years. The shares make their formal trading debut on 30 June.

The float has been controversial given claims that online betting is banned in the US, home to many Partygaming users.

The Gibraltar-based firm was set up in 1997 and had profits of 371m in 2004.

Windfall looms

During the first three months of 2005 earnings growth has continued and sales almost doubled from the same period a year earlier.

Values of major FTSE 100 firms
Vodafone 85.8bn
Morrisons 4.92bn
J Sainsbury 4.89bn
ITV 4.80bn
Partygaming 4.64bn*
Old Mutual 4.68bn
British Land 4.59bn
Hilton Group 4.50bn
Tate & Lyle 2.28bn
William Hill 2.11bn
Source: Thomson Financial
*Based on offer price of 116p

The company said the money raised in the flotation would be used to fund acquisitions, develop new products and expand its business into new countries.

Founders Anurag Dikshit, husband and wife Ruth Parasol and Russ DeLeon, and Vikrant Bhargava, are in line for windfalls which could reach 1bn.

They will keep share stakes worth more than 3bn.

Investor reaction

Euan Stirling, investment director of Standard Life, told the BBC that the 116p price - towards the lower end of the expected range of 115-120p - meant the firm "was looking to encourage a positive aftermarket" in the shares once trading began.

A number of people play online together at Partypoker
The risks surrounding Partygaming are hard to price in

But he pointed out that the company is in an unusual situation, facing risks which were difficult to price.

"If the regulatory or legal situation changes, the taps can effectively be turned off for Partygaming (in the US)," he said. "So the fast growth investors are looking for could disappear in smoke."

The company also faced criticism from organisations concerned about the 24-hour availability of online gambling, which encourages users to chase losses.

Deep concerns

(Partygaming should) submit themselves to regulation and taxation, and prove that they care about some of the vulnerable people who end up addicted to gambling
Jonathan Lomax of The Salvation Army

"The Salvation Army is deeply concerned by the explosion of internet gambling sites such as Party Poker, Jonathan Lomax of The Salvation Army, a UK charity, which does a lot of work with the homeless, said.

"Online gambling is potentially very addictive and can ruin people's lives. Following the passing of the Gambling Act internet gambling sites will be able to register in the UK.

"They (Partygaming) should commit to doing that, submit themselves to regulation and taxation, and prove that they care about some of the vulnerable people who end up addicted to gambling."

The background to Partygaming

Q&A: Partygaming share offer
27 Jun 05 |  Business
Shadow cast on Partygaming sale
16 Jun 05 |  Business
Poker firm in bumper share offer
15 Jun 05 |  Business
The human cost of online gambling
07 Jun 05 |  Business
Poker firm bets on 5bn flotation
02 Jun 05 |  Business
Bets on for poker site to float
27 Jan 05 |  Business

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