Who will join the party?
Forgive me, but I have to return to the flotation of PartyGaming, the online gaming company that raised billions of pounds in an IPO last month.
The company instantly became one of the biggest publicly quoted businesses in
the UK, made millionaires of its owners and turned BDO Stoy Hayward into a
FTSE100 auditor overnight.
The reason it’s worth returning to PartyGaming, however, is not to marvel at
the year’s only £1bn IPO and wish we’d got some of the action, but to consider
whether it will have any lasting effects on the listings market.
It might be argued that these events never happen in isolation and that there
are external factors driving PartyGaming’s decision to go now. If there are,
then other executives, particularly those interested in raising capital from the
stock markets, may be considering their own flotation options.
And are there any online gaming companies who might capitalise on a
PartyGaming bandwagon and rush to launch their own IPO?
This is not as unlikely as it sounds – though they might wait for the fuss
over PartyGaming to go away so they can generate their own hue and cry. Interest
in online gaming and the cash it clearly generates would probably interest
investors enough to have a good look at a new offering.
Their ability to get to market quickly should not be underestimated, either.
Gone are the days when companies groomed themselves for years, using specially
recruited executives to ready themselves for a public offering.
The various preparatory processes obviously take some time. The due
diligence, after all, needs to be done well, though it’s a painstaking bind.
Even so, nine months from the decision to float until the first day’s trading is
not seen as unreasonable. That’s one quarter for due diligence, and two to
complete the process. If people were starting their prep work now, we could see
the fall out from PartyGaming in the spring.
Here’s more good news. KPMG recently produced research showing IPOs may be on
the up in London. The second quarter saw £3.1bn raised, against just £1.5bn in
the first quarter of 2005. Here’s hoping we are seeing a trend.
Gavin Hinks is deputy editor of Accountancy Age