The world’s second-largest internet poker company is preparing to float on the London stock market before the end of this year, with a value likely to exceed $2 billion. The online company is understood to be talking to a number of investment banks, including HSBC and Dresdner Kleinwort Wasserstein, with a view to engaging to work on the listing. Both banks are experienced in leading IPOs for online gaming companies.

HSBC previously led the flotation for 888, the world’s largest online casino, while Dresdner floated PartyGaming, the operator of the world’s largest online poker site. 888 is currently trading at a value of $1.4 billion while PartyGaming is traded at a value of $10.6 billion. In a report of the English Sunday Times, which said that "while no banks have yet been mandated, insiders said the company was gearing up for the process and was lining up advisers."

Pokerstars, like its counterparts Empire Online, 888, and Playtech, is controlled by Israelis. The company’s controlling shareholders are Isai Scheinberg, who lives in Canada, and an unknown Tel Aviv-based businessman, Pinchas Shapira. They are believed to jointly control a 75% stake in the company, with the company’s employees owning the other 25%. The company, which was founded seven years ago, operates the world’s largest online poker tournament.

Last month, Pokerstars crossed another milestone with the announcement that it registered its five millionth player, double the number of registered users a year ago. Financial sources believe Pokerstars has annual profits of US$150-200 million and will therefore trade at a value of $2 billion, reflecting a profit multiple of 10-13. PartyGaming, by comparison, is currently trading at an expected profit multiple of 16.5 for 2006. (E-04.18.06)

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