September 29, 2010 / 8:51 AM / 9 years ago

UPDATE 3-Czech Penta to float stake in betting firm Fortuna

 * Fortuna confirms IPO, declines comment on stake
 * Company valued at up to 250 million euros by analysts
 * CFO sees growth continuing, online betting to grow
   (Adds CFO comment)
 By Jason Hovet
 PRAGUE, Sept 29 (Reuters) - Czech and Slovak financial group Penta Investments will list a minority stake in betting group Fortuna Entertainment on the Prague and Warsaw stock exchanges, the companies said on Wednesday, confirming earlier reports.
 The two firms said the initial public offerings (IPO) would take place by the end of the year, marking a partial exit by Penta after buying the group five years ago. It will be the first share offering in Prague in more than two years.
 Analysts estimated the firm to be valued at up to 250 million euros ($340.3 million), which would make it smaller than nine out of the 14 companies that make up Prague's PX index .PX.
 "Over the last three years, the company has grown more than 10 percent annually, which we believe will continue for some time," Fortuna's Chief Financial Officer Michal Veprek said.
 Veprek said Penta would keep a majority stake but declined to confirm a media report on Wednesday that the sole shareholder would sell a 35 percent stake. Czech website motejlek.com also reported the offering would begin on Oct. 11.
 Two sources told Reuters last Friday that the flotation would take place by the end of October, but declined to say how much the IPO would be worth. [ID:nLDE68Q056]
 Erste Group Bank (ERST.VI), one of the IPO managers along with UniCredit (CRDI.MI), valued Fortuna at 180 million to 250 million euros, based on multiples of 10 to 14 times estimated 2010 earnings, said an analyst and fund manager who saw the report but declined to be named.
 Komercni Banka analyst Miroslav Adamkovic said Fortuna's known brand in the Czech Republic, interesting dividend -- which the company said would be 50-100 percent of profit -- and growth would make it more interesting for retail investors.
 "Low capitalisation and with this (low) liquidity of the title could bother bigger investors," he said.
  
 ONLINE GROWTH
 Fortuna, active in the Czech Republic, Slovakia, Poland and Hungary, reported an 11 percent rise in earnings before interest, tax, depreciation and amortisation (EBITDA) to 11.61 million euros in the first half of the year.
 It took bets worth 191.6 million euros in that time, up 12 percent from the year before. Veprek said online betting, which makes around 40 percent of revenue, would be a growth driver.
 In 2009, Fortuna booked 338 million euros in bets and a net profit of 16.9 million euros. It holds 30 percent market share in its main market, the Czech Republic.
 Fortuna's Austrian peer, the Vienna-listed internet bookmaker bwin BWIN.VI, traded with a price to estimated earnings ratio of 18.63 on Wednesday, while the European sector average was 16.25, according to Reuters data.
 The Prague bourse has had a drought of share offerings in recent years due to the economic crisis and low interest rates that make it easier for companies to finance through bank loans.  (Additional reporting by Jana Mlcochova; Editing by Sharon Lindores)  ($1=.7347 Euro)
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