Flutter Entertainment would have to sell part of its holding in FanDuel to support an IPO
Flutter Entertainment (LON:FLTR) confirmed on Monday that it is thinking about the prospect of listing a small share of its holding in FanDuel.
The Irish gambling company – which owns Ladbrokes, Coral and Bwin – said that it “regularly evaluates its organizational and capital structure to assess how best to position itself to deliver upon the group’s strategy.”
Analysts at Peel Hunt valued FanDuel at around £12bn of Flutter’s £27bn market cap, adding that FanDuel’s smaller rival, DraftKings, trades at a market value of $28.5bn which they said “appears to support the argument that FanDuel is undervalued”.
AJ Bell investment director Russ Mould believes a listing would make sense for Flutter Entertainment.
“Flutter potentially listing its sportsbook and daily fantasy sports betting business FanDuel in the US makes perfect sense for two reasons.”
“First, it is likely to get a much higher valuation than is currently attributed to the operation as part of the Flutter group.
“Second, this is arguably the most exciting part of its group and it seems logical to want to capitalise on positive momentum and give investors an opportunity to invest purely in this bit. It also helps there is already a listed peer in the form of DraftKings.
Mould adds that the company would have to sell part of its holding in FanDuel to support an IPO:
“Flutter would have to sell part of its holding in FanDuel to facilitate an IPO. On one hand this means giving up some of the potential future gains, but it could also generate a significant chunk of cash to help pay down debt.
“Importantly, Flutter has indicated it would only sell a small part of FanDuel to support an IPO. That would suggest that FanDuel would still play an important role within the larger group and be able to access funding.