Online poker company’s stock opens strong in London IPO

Tuesday, June 28, 2005 | 9:03 a.m.

LONDON -- Shares of PartyGaming PLC, the world's biggest online-poker company, rose 11 percent in their first day of trading Monday on the London Stock Exchange despite concerns of a possible crackdown on Internet gambling in the United States, where most of its players reside.

Shares in Gibraltar-based PartyGaming opened at an offer price of 116 pence ($2.12) on the London Stock Exchange, valuing the company at 4.64 billion pounds ($8.46 billion). By the end of trading, the share price had risen to 129 pence ($2.35).

Analysts originally had expected an offering that would value the company at closer to 5.5 billion pounds ($9.9 billion), given the boom in the worldwide online gaming market -- of which PartyGaming estimates it has a 55 percent share.

But earlier this month, PartyGaming announced it planned to sell shares at between 111 pence and 127 pence ($2.01 to $2.30). Some analysts blamed the lower-than-expected range on investors' fears about a clampdown on online gambling in the United States. PartyGaming, which runs the partypoker.com Web site, derives about 87 percent of its income from U.S. gamblers.

PartyGaming acknowledged in its prospectus that it relied on U.S.-based payment processors, including credit-card companies, and U.S. legal action posed a great risk to the stock.