Playtech trades on Main Market; reveals black market exposure

Online gaming software giant Playtech achieved a new landmark for its business today when it started trading on the Main Market of the London Stock Exchange.

CEO Mor Weizer called the completion of its move to a Premium Listing on the Main Market from the Alternative Investment Market (AIM) “an exciting day for Playtech”. The software business, founded in 1999, first listed in London on the Alternative Investment Market (AIM) in March 2006, going on to grow revenues by 215% between 2007 and 2011, and pre-tax profits by 193%.

Its prospectus for the move also provided the most publicly available detail to date of Playtech’s risk exposure to “black” markets where: “[L]egislation or regulation may be interpreted in such a way as to criminalise certain activities of the Group, its Licensees or any of their respective agents or intermediaries.”

According to the document, three territories fall into the highest category of risk, namely China, Malaysia and Germany. In China, Playtech’s directors “believe that approximately 3.6 per cent. of Gross Income was generated through Licensees transacting with the Chinese market” last year, while for Malaysia this figure was revealed to be 8.4% and for Germany, 7.7%, meaning that 19.7% of Playtech’s gross income was generated by licensees operating in these black markets in 2011.

Playtech also pushed through three related-party transactions with founder and 49.66% shareholder Teddy Sagi in the weeks leading up to its long-delayed move to the more stringently regulated Main Market. These included paying €6m a year to license software and £750,000 to lease an office and apartments from companies in which Sagi is “beneficially interested”. Sagi’s Brickington Trading vehicle is allowed to raise its shareholding up to 49.99% as part of the conditions for Sagi underwriting the issue of extra shares in the company in December last year.

Playtech said ahead of the move that it hoped a Premium Listing would raise its profile, increase the liquidity of its shares and widen the potential range of investors in its stock.

The Isle of Man-headquartered business, that has divisions in the UK, Israel, Ukraine, Bulgaria and the Philippines, supplies most of the leading operators in the space, including bet365, Paddy Power, William Hill. As well as its core casino games, Playtech also runs iPoker, the leading network for cash game traffic, according to tracking site PokerScout, and owns top-two bingo network, Virtue Fusion Alderney.

Playtech shares closed at 349.5p, the same price at which they started trading at 8am this morning, giving Playtech a market cap of £998.5m.

Casino Choice journalist

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