NETeller Floats on the AIM

Officials from NETeller are pleased with early trading results following the company's float Wednesday on the Alternative Investment Market in London. The IPO was the biggest ever on the AIM, with the company valued at £240 million.

"It's now up to us to get the story out there because a lot of people don't know who NETeller is."

- Gord Herman

CFO Eric Hughes said the first day of trading (in which the company's shares opened at 200p and closed at 197p) went "as well as we had expected."

"Some significant shares traded hands, and we pretty much stayed level on the day. Obviously some traders want to see a quick spike, but for a long-term perspective we are pleased with staying level."

The company, which provides Internet payment solutions, raised £30 million through the IPO and will use proceeds from its fundraising for Web site development, general working capital and acquisitions.

John Lefebvre, co-founder of the business and a non-executive director, has a stake valued at around £52 million, according to published U.K. reports.

Lefebvre and co-founder Stephen Lawrence each sold £5 million of shares to assist the flotation but pledged not to sell any more for 12 months. The duo still controls 22 percent (a £52.8 million stake) of the company.

Hughes said many investors who got in on the IPO are looking at NETeller as a long-term investment.

"A lot of them told us they are going to just put it in a lock box and then take it out in a year or two and take a look at it," he said.

"We are so dependent on the U.S. and North American market now. That still is a large part of our business, but we are trying to branch out and become a true global leader."

- Eric Hughes

Lawerence started NETeller in 1999 and targeted the online gaming industry as its main priority. The company turned a profit of $221,000 after taxes on $24.5 million of sales in the year ending in August of 2003.

NETeller had more than 586,000 customers by the end of 2003 and averaged more than 1,600 new ones a day. Over 1,200 merchants, many of them in the I-gaming space, use the company's payment system.

Monthly turnover for NETeller has increased from $4.3 million in December to $5.7 million last month.

Despite the rising sales figures, NETeller has remained relatively unknown outside of the I-gaming space. Gord Herman, the company's chief executive, hopes to change that now that they've gone public.

"It's now up to us to get the story out there because a lot of people don't know who NETeller is," Herman said.

The IPO has enabled NETeller to continue its push into emerging markets like Europe and Asia with less reliance on North America, where legal questions remain and cloud the picture for many operators.

"We are so dependent on the U.S. and North American market now," Hughes said. "That still is a large part of our business, but we are trying to branch out and become a true global leader."

Herman expects more online gambling to boost revenue growth as younger people shop around for better prices for sports and casino betting.

The company's next big task, Hughes said, is getting regulated by England's Financial Services Authority, a process the company hopes have completed in the next three to four months.

"That will give us the stamp of approval that we are operating to the highest levels and ethical standards," he said. "We want to become more global in outlook and this is just another way to accent that."

In the immediate future, the company is looking into acquisitions. Herman said the company has two lined up. Both are all-share transactions worth about £10 million each.