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… be for sale and one imagines it will be a far sight more expensive than the £1.5bn valuation Softbank acheived when it took a private stake in April 2006. Speculating about big brand name corporate deals is obviously fun but risks confusing the real point.
Any business predicated on charging a significant ‘metered’ transaction fee for matching or facilitating a (digital) trade is likely to see it’s business model washed away like a sand castle at high tide and needs to be ready …
The weekend press (Sunday Times, Telegraph) reported on the acquisition of 23% of Betfair by the Japanese firm Softbank, a deal that was initially announced at the beginning of March. The Times article questions the valuation (67x 2005 earnings but 30x forecast 2006 earnings) :
At just over £300m, the investment values Betfair at about £1.5 billion — 30 times 2006’s projected earnings and 67 times last year’s operating profit. Multiples like that remind City analysts of the dotcom boom of 2000. But in Betfair’s case, its supporters argue, the rating is justified…
…The sceptics accept that the Betfair model has revolutionised gambling, but many doubt that its premium rating is justified. “Betfair’s growth has been phenomenal, but it no longer has the market to itself,” said one analyst. “Things could get a lot tougher.”
I think it is interesting to compare this with the valuation multiples observed in the world of financial exchanges. If you recall, I posted a great graph (by Morgan Stanley via the Economist) on this subject a couple weeks ago. Here it is again:
Without knowing the exact numbers, at 30x forecast 2007 earnings (if the Times report is correct), it would seem that Betfair would fall more or less in line with this universe. It will be interesting to calibrate as and when they disclose their growth figures.
PayPal Europe to facilitate Betfair’s P2P payments:
By using PayPal, Betfair customers will be able to use a variety of funding sources including credit and debit cards, their existing PayPal balance and, in the UK and Germany, transfers from their bank accounts. Betfair customers will also be able to withdraw winnings directly into their PayPal accounts.
Yet another step towards the converged AmazonBay future?
And, Japanese technology firm buys 23% stake in Betfair:
BETFAIR, the betting exchange operator, is to sell a stake of up to 23 per cent to SoftBank Corporation, of Japan, in a deal valuing the group at just over £1.5 billion.
The deal would link Betfair to Masayoshi Son, SoftBank’s president and chief executive, who has been dubbed Japan’s Bill Gates.
Under Mr Son, the high-tech company has invested aggressively in a wide range of online, media and telecoms ventures, ranging from financial services to broadband infrastructure and publishing. It owns Japan Telecom and is Yahoo!’s partner in Japan.
Perhaps the film needs to be rewritten: YahooBay!
