PartyGaming Slumps as Founder Dikshit Sells Stake
Jonathan Browning Reporting...
(Bloomberg) -- PartyGaming Plc, the owner of the PartyPoker.com online-gambling brand, fell the most in three years in London trading after founder Anurag Dikshit sold two- thirds of his stake in the company.
PartyGaming dropped 16 percent. Dikshit sold 75 million shares in the company through his Crystal Ventures Ltd. vehicle, according to a statement today. The shares were sold by Goldman Sachs Group Inc. at 250 pence per share through an accelerated bookbuild to institutional investors.
In December 2008, Dikshit pleaded guilty to illegal Internet gambling in the U.S. and agreed to cooperate with the Justice Department in its probe of the company. He paid $300 million in fines and is scheduled to be sentenced next year.
"He wants to move on with his life, sell his shares, endow them in his charitable foundation, and move away from the whole issue and industry of PartyGaming," said Shimon Cohen, Dikshit's spokesman, in a telephone interview. The founder may also sell his entire stake in the future, Cohen added.
PartyGaming was founded in 1997 by a group including Dikshit, who created its software platform. The company's 2005 initial public offering made him the world's 207th-richest person the following year, according to Forbes magazine. Dikshit, who's based in Gibraltar, previously held 113.8 million PartyGaming shares, or 27.9 percent of the company, according to Bloomberg data.
Liquidity
"Anything that improves the liquidity and the institutional shareholder base has to be a good thing," said Nick Batram, an analyst at KBC Peel Hunt in London. He said the company may also find it easier to raise funds from institutional investors rather than the founders for large sports gambling acquisitions.
PartyGaming shares fell 44.4 pence to 2401.1 pence, the steepest decline since October 2006, giving the Gibraltar-based company a market value of 978.5 million pounds ($1.6 billion).
PartyGaming, which paid $101 million in April to avoid prosecution by the U.S., may benefit from Dikshit's stake sale, if online betting is legalized in the country, Batram said. "Would the U.S. authorities still look unkindly against them, given some of their shareholders' position, well I think there is that risk."
