Investors clamor for shares as Internet poker site goes public

Jun 28, 2005 3:42 AM

London is burning!

The city is afire, both the city itself and its residents, not in flames but in the fiery passion of trying to buy stock in the hottest placement in years: the Internet poker firm PartyGaming.

Reports from London say the city has placed orders for more than double the number of shares available, and the owners of the company, which offers the online poker brand PartyPoker, are about to become multimillionaires.

Andrew Garrood, working for Cantor Index in London, says of the phenomenon, "We are dealing with a stock the like of which we have never seen before."

Before you get too excited, shares are not being offered in the United States, because of the strength of demand in the United Kingdom and Europe.

One London analyst, Richard Hunter, has warned about "the hallmarks of a speculative investment," finding it odd that the market value of PartyGaming will exceed that of British Airways, but it has not deterred those clamoring to buy. Hunter, who works for the broker Hargreaves Lansdown, is uneasy about the regulatory risks here, where PartyPoker reportedly makes 90% of its revenues, and he asks if the stock "is an accident waiting to happen." But he acknowledges that "simply in terms of the incredible amount of cash that it is generating and its relatively low cost base, it will probably get away quite successfully."

That’s British understatement.

Full trading is scheduled to start this week, and when it does the owners of PartyGaming and their 1,000 employees in Great Britain, Gibralter and Indian — who own a 5.6% stake in the company — will rejoice. The four principal owners — attorney Ruth Parasol, once best known for her Internet porn operations on the West Coast, and her husband Russ DeLeon, operations director Anurag Dikshit, and Vikrant Bhargava — could net as much as $1.5 billion from the the proposed sale of 23% of their share, according to Scotsman.com, which reported on the explosion.

According to that site, PartyPoker.com’s online poker operations have attracted more than one million players since it began four years ago. Customers pay commission, known as rake, to play against each other on dividual tables of up to 10 players, or in tournaments. The company amassed pre-tax profits of 371.7 million U.S. dollars last year, according to the Web site, up from 89.2 million a year earlier. Once known as iGlobalMedia, Party-Gaming also operates brands including Starluck Casino and PartyBingo. It has 126 people working in its Gibralter office, a marketing staff of 57 in the United Kingdom, and 925 support and software development workers in India. Thomas Friedman, who wrote about the software phenomenon in India in his book The World is Flat, must be proud of Dikshit and his troops.

According to Scotsman.com, online poker generated some 553 million U.S. dollars, or 92% of PartyGaming’s revenue, last year.

While all of this was going on overseas, there was unpunished larceny in Texas.

Little David Stern handed big Tim Duncan the NBA playoff’s Most Valuable Player hardware.

Tim is a favorite of ours, that furrowed brow and often seemingly puzzled look making him look like a troubled kid. We know he is a great basketball player, but he was not the most valuable player of the championship series. As good as he is, he looked like a hapless Shaq O’Neill missing free throws wholesale, and he fumbled a few easy drop-ins that cost the Spurs dearly.

The most valuable player for San Antonio, and for the whole playoff scene, was Manu Girobili. Motivated, inspired, on fire throughout, he made some of the most spectacular plays professional basketball has seen this year.

The Associated Press was only partly correct in reporting that Girobili is on the verge of becoming one of the most recognized athletes in the world. He already is, a national hero in his native Argentina, where he gave that country a gold in the Athens Olympics, and a heroic figure as well in Italian basketball, where he played on two championship teams.

He is a star in the mold of Michael Jordan, a game-breaker and a go-to guy whose personality and court presence make him tower, not physically but in popularity, over teammates and opponents alike.