Unibet's Trifecta: A Float, a Joint Venture and a Bold Challenge

Online betting group Unibet is getting its summer off to a hot start with a bevy of activity. Last week the company floated on the Swedish Stock Exchange, raising eyebrows over a perceived challenge to Sweden's gambling monopoly; On Monday, they announced plans to launch an online poker room by September.

Unibet Group has its main offices in London, but decided against listing on the British Stock Exchange, even though doing so would have saved the company money. CEO Pontus Lesse said the decision to list in Sweden was based mainly on the company's strong presence in the Swedish market.

"We get more than 40 percent of our turnover from Sweden," Lesse said. "Most of our ownership is primarily Swedish as well, so that played a major factor in the decision too."

The IPO subsequently raised concerns within the government. Swedish Finance Minister Bosse Ringholm, an outspoken opponent of the float, in May expressed his displeasure with officials at the Swedish Stock Exchange for failing to protect government interests.

The Exchange, which is partially owned by the government, was criticized for allowing Unibet to list, virtually giving it an upper hand in competing with Sweden's gambling monopoly.

Lesse said it was in the best interest for Unibet to list in Sweden, where it could attract the interest of more gamblers and investors who are hungry for new competition in the Swedish gaming market.

The listing in Sweden was official June 8, and investors reacted favorably to the idea of buying into the burgeoning online bookmaker.

Investors bought nearly 900,000 shares in the company, more than 700,000 of which were new shares. The stock opened at $1.79 per share, and more than $16 million was raised through the IPO. The offering amounted to approximately 14.1 percent of share capital and votes in Unibet. After issue and listing expenses, Unibet generated nearly $10 million in new capital.

Unibet now has more than 2,000 shareholders, nearly half of them coming from Swedish and international financial institutions.

Unibet's post-IPO share capital consists of 6,262,798 ordinary shares, each with a nominal value of £0.02.

Unibet officials didn't comment on their exact plans for the infusion of capital, but Lesse said the float will do more for Unibet in the long run than any short-term deals or projections.

"Unibet has a strong position in the growing online market," Lesse said. "Our listing will increase our visibility with investors, particularly in Sweden, and will provide a strategic platform for our continuing expansion."

The company earned pre-tax profit of £2.9 million on turnover of £144 million in 2003, according to documents filed with the Swedish Stock Exchange.

In the wake of the public listing, Unibet quickly went to work to expand its business and increase its market share in the online gaming sector.

The group on Monday announced a joint venture with Swedish company 24hBET AB to add poker to the Unibet site by September. The partnership will focus on creating a poker network that other operators can join to increase the liquidity of the system.

Lesse said taking advantage of the enormous growth in online poker was an easy decision; it was just a matter of finding the right partner.

"Unibet has a strong brand name and a large customer base in the Nordic area, and 24hBET has both specialist knowledge of poker and high quality software," Lesse said. "This venture is very exciting, as poker is the fastest growing segment within online gambling."