IG Index Float to Finance Expanded Sports Betting: IPO Focus

[AussieVamp2]

By Elena Moya


London, June 9 (Bloomberg) -- IG Index Plc, a U.K. spread betting company, will sell 17 percent of its shares in an initial public offering in July to finance expansion in a country where two-thirds of the adult population plays the National Lottery regularly.

The ``general expectation'' is that the company could be valued at 110 million pounds ($166.1 million), after raising as much as 15 million pounds by issuing new shares on the London Stock Exchange, Chairman Stuart Wheeler said. Two million pounds will be used as working capital, and the rest will be for current shareholders selling their stakes.

Wheeler will own 33 percent of the company after the sale. The 17 percent of the company on sale will be sold to individual and institutional investors, Wheeler said. Employees have options over 12 percent of the shares. Investec Henderson Crosthwaite Ltd. is managing the sale.

``Members of the staff have options, and its important to keep them, that is one reason for the flotation,'' Wheeler said. ``It will also give us publicity and bring us business, and a bit of money for the company.''

The company had a pretax profit of 10 million pounds in the 12 months to May 31, compared with 3.5 million pounds in the year- ago period, and 1.1 million pounds in the year before that, Wheeler said.

Founded in 1974, the company offers bets on stocks, indexes, commodities, metals, interest rates, exchange rates, options and sports such as soccer or rugby. IG Index takes about 30,000 bets per week and has 12,000 individual clients with active accounts.

About 10 percent of the bets come through the Internet. The rest is done on the telephone, Wheeler said.

``We have a wide range of customers, rich people, taxi drivers or hairdressers,'' Wheeler said.

IG Index does not rule out the acquisition of a competitor, Wheeler said. Other non-publicly traded betting companies include City Index, Sporting Index, Cantor Index, Spreadex, and William Hill Index.

Profits from the bets are treated as gambling winnings, which are not taxed in Britain, as opposed to the capital gains taxes that are levied on profits from share sales. Betting companies pay the gambling duty themselves and don't charge brokerage fees.

[AussieVamp2]

IG Index floats with £110m tag
By David Blackwell
Published: June 9 2000 19:08GMT | Last Updated: June 9 2000 19:18GMT



IG Index, the bookmaker that caters for the City's insatiable gambling habits, is to seek a full listing next month. The flotation is expected to value the company, which specialises in financial spread betting, at about £110m ($160m).

The company was founded 25 years ago by Stuart Wheeler, who broke from convention after Eton, Oxford, the Welsh Guards and the Bar to offer bets on the price of gold.

IG stands for Investors' Gold, although gold is just a tiny part of the business now. "It's a jolly bad name, but it's a bit late to change it," said Mr Wheeler.

Until recently, the bulk of the business was in bets on the Footsie. For example, the company quotes a price of 6,770 to 6,780 and the gambler places a bet - say £10 a point - for either a fall or rise.

However, betting on the Footsie has been overtaken by spread betting on single stocks. Mr Wheeler attributed the increasing popularity of this type of bet to the increasing number of private investors.

"Not only are there more of them, but there is greater sophistication and awareness of different ways of playing the market," he said.

That has helped the group grow rapidly over the last three years, reporting a rise in profits from £3.5m to £10m in the year to May 31. It is also benefitting from more increasing interest in spread bets on sport.

The group, advised by Investec Henderson Crosthwaite, is aiming to raise £15m in the float, most of which will go to the founders who put up an initial £1,000. However, the founders, including Mr Wheeler who will have 33 per cent after flotation, are holding on to most of their stock.

Mr Wheeler said one of the main aims of the float was to give the 115 staff the chance to benefit from their options. "It is becoming more and more important to obtain and keep good people," he said. Half the shares in the issue will be offered to 12,000 existing clients.