TURFTRAX FLOAT DELAYED BY DUBAI HASSLES

25 January 2008

11 percent stake in company to be restructured


London financier Michael Spencer and his team backing an imminent AIM launch have encountered some last minute hassles in floating horse-race betting technology firm Turftrax following an eleventh hour pause to restructure the investment by the Dubai government fund taking an 11percent stake.

The UK newspaper The Daily Telegraph reports that TurfTrax was originally set to list on January 11 but was forced to delay the float amid speculation as to whether the investment by Istithmar - a fund owned by the Dubai government - could be viewed negatively in a largely Muslim country where gambling is illegal.

Istithmar is an arm of the government-owned Dubai World group. The Dubai government has courted controversy in the recent past by putting money into businesses directly linked to gambling. Last year, it came in for fierce criticism after taking a $5.2 billion stake in Las Vegas casino operator MGM Mirage, saying at the time that it was attracted by the high-end hotel business rather than gambling.

In an early draft of the TurfTrax admission document seen by The Daily Telegraph, Istithmar World Real Estate was listed as taking an 11.37percent stake in the company once it floated.

However, in the latest stock exchange filing from TurfTrax released just before the weekend, Istithmar is not cited among the "significant shareholders". The same release also indicated that the company's "expected admission date" had been put back to January 30.

A spokesman for TurfTrax said that Istithmar was going ahead with its investment but had merely decided to change the subsidiary through which the investment was held. He explained: "The delay has been caused through the administrative process resulting in the change of the investing subsidiary of our investor in the Middle East. We've got a responsibility to let the market know, although the delay doesn't affect anything to do with the float."

TurfTrax is betting its future on the growing popularity of in-race gambling with younger punters. The company has developed the first fully-electronic in-race betting platform, which it hopes to sell onto major bookmakers such as Ladbrokes and William Hill.

TurfTrax, which is chaired by former National Express chief executive Adam Mills, started life doing soil analysis for the agricultural industry before moving into horse-racing, where it used the same technology to measure the quality of the ground at racing tracks. The firm then branched out into data provision, after gaining exclusive permission to attach electronic chips to horses at 37 of the UK's 59 racecourses.

In-play betting has been gaining a growing following on websites such as Betfair and TurfTrax hopes to capitalise on this trend with its fully-automated system, which will make it easy for bookies to offer changing odds as a race develops.

"This is a tremendous opportunity for a young business," said managing director Mark Kent, a former executive at racecourse operator Arena Leisure. "In-play betting is becoming increasingly popular in football although it's never been achievable in horse-racing without real-time data to get the price."

Punters bet GBP 10 billion on the races in 2006 and TurfTrax hopes to tap into market with its new platform. "The initial response from a significant part of the UK bookmaking industry has been positive and the group anticipates launching a fully commercial product, capable of integration into a bookmaker's risk management system during the first quarter of 2008," the company said in its draft admission document.

But it warned: "The group's strategy anticipates that the availability of in-running betting products for horse racing through fixed odds bookmakers will result in the growth of a substantial market for such betting. If this does not occur there would be a material adverse effect on the group's financial performance."

TurfTrax will float at 40p with a market capitalisation of GBP 17.5 million, after raising GBP 3.2 million to fund its expansion into in-race betting. Prior to the float, 47pc of TurfTrax was owned by IPGL, an investment vehicle controlled by Spencer. His stake will shrink to 38percent once the shares are admitted to trading on AIM.

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