CHRISTMAS LAUNCH FOR ASIANLOGIC

28 December 2007

Playtech exec's gaming company the first to launch since UIGEA debacle


Breaking the bad luck voodoo that has haunted the online gambling industry for the past year since the Unlawful Internet Gambling Enforcement Act passed, an online gambling firm founded by a top Playtech executive is scheduled to launch its IPO on London's AIM market this Friday.

AsianLogic will become the first major online gaming company to list on AIM since the crackdown in the US forced the withdrawal of many listed gambling companies from the American market last year, causing billions in losses to investors.

The Hong Kong-based company will float at 111.62p with a market capitalisation of GBP 123 million, having raised GBP 40.7 million to fund its ambitious expansion plans, the UK newspaper The Telegraph reports.

AsianLogic was founded in 2002 by Playtech's senior man in Asia Tom Hall, ex-Army officer Chris Parker and Chi Kan Tang, with a view to capitalising on the massive popularity of betting in Asia and the growing penetration of the internet.

The company generates three quarters of its revenues from online casino games but also owns a small chain of sports betting shops in the Philippines. The majority of its customers are based in Malaysia and Singapore, where broadband internet access is relatively widespread and gambling laws are more liberal.

"I've been involved in a couple of listings and, in what was a pretty tough market, we got support from a wide range of institutions," explained Hall, who is executive vice chairman of AsianLogic. "Asia is growing rapidly as a gaming environment both on land (i.e. casinos and betting shops) and online and we are one of the first major online gaming groups in Asia."

In its pre-IPO research, Collins Stewart noted that AsianLogic was likely to use the cash raised from the listing for a number of acquisitions. Like some of the more attractive AIM companies, AsianLogic is planning to pay dividends. Stephen Ford, an analyst at Collins Stewart, reckons the shares could yield 6pc in 2008, rising to 8.9pc in 2009.

But this investment opportunity is clearly not one for widows and orphans. AsianLogic's admission document includes 16 pages on the "regulatory environment and risk factors".

These are not for the fainthearted. For example, in Hong Kong, aiding and abetting online gambling is a serious criminal offence. AsianLogic does not take any bets from Hong Kong but it admits that "as the group's gambling activities would be considered illegal if conducted in Hong Kong, it might well therefore be in breach, on a strict interpretation, of the provisions of organised and serious crimes ordinance".

However, the company stressed that "local counsel have advised the group that the risk of it and/or the management being prosecuted for this offence, or the related offence of failing to report such proceeds to the authorities, is low".

"The risk to our business is regulatory risk, not competitive risk," said Hall, who is also a director of AIM giant Playtech, which makes online gaming software for operators including AsianLogic. "We've learnt our lessons from the US fallout, so the regulatory process with our lawyers was very tough."

Before the float, 7pc of AsianLogic's income came from Italy but Hall said that as the company's lawyers and accountants were not able to "get comfortable" with the legal status of online gambling in Italy, that whole business was dropped.

Online Casino News courtesy of InfoPowa