Shares in Betfair and Paddy Power Betfair owner Flutter Entertainment (FLTR) topped the FTSE 100 leaderboard on Monday, rising 7% to £168.95 after the company said it was considering a partial floatation of its US fantasy sports business FanDuel.
Responding to press speculation the company confirmed it was considering listing ‘a small’ shareholding FanDuel which is the leading fantasy sports franchise in the US.
US gambling companies are valued more highly than their UK counterparts and by partially floating FanDuel Flutter could benefit from the increased valuation while only selling a small part of the business.
Russ Mould, investment director at AJ Bell commented, ‘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.’
Shore Capital estimates that eliminating the valuation gap to smaller peer Draftkings would be worth an extra £20 per share for Flutter shareholders, while also noting that ‘a premium is arguably merited.’
On 3 December 2020, Flutter increased its ownership of FanDuel to 95% by acquiring the 37.2% interest held by Fastball for $4.2 billion.
