888 Holdings Plc., owner of Pacific Poker, saw its shares drop to 170 pence on the London Stock Exchange yesterday despite successful early morning trading valuing the shares at 180 pence. It closed at GBP 575 million.
The instability of the shares sent waves throughout the gaming sector, causing Sportingbet to fall by over 3% and PartyGaming Plc. to fall 8.6%, closing it at 87.5 pence, 25% down on its original June listing of 116 pence.
888 chief executive John Anderson admitted that PartyGaming's recent warning of future slow growth in the online gaming industry has upset the market, causing increased apprehension regarding valuations and hesitancy among investors. Indeed, originally expected to launch a float valued at nearly GBP 800 million, PartyGaming's statement caused 888 advisors at HSBC to devalue the float by over 30% in order to secure investor support. Consequently, when 888 launched its floatation yesterday its shares were priced at 175 pence giving it an initial market capitalization of GBP 590 million.
Investors approved 888's IPO pricing as compared to PartyGaming's, which remains highly dependant on poker and the sketchy U.S. gaming market. Anderson hopes to significantly reduce 888's dependency on the U.S. as federal regulation is uncertain and is expected to tighten. 888 nets 55% of its revenues from the American market and is looking to switch its focus to the European and Asian online gaming communities. Currently, approximately two-thirds of 888's revenue is drawn from casino games such as roulette and blackjack, with a third coming from Pacific Poker.
The founding shareholders in 888, the Shaked brothers and the Ben-Yitzhak brothers, sold off 25% of their holdings and raised GBP 147 million. Their remaining shares are worth approximately GBP 430 million. Anderson collected GBP 1.6 million from selling his free shares.