- Flutter mulls secondary US listing
- Company to consult with shareholders
- Plans for separate FanDuel listing put on back burner
Shares in gambling company Flutter Entertainment (FLTR) gained 1.5% to £127.35 on Tuesday after announcing aspirations for a secondary listing following the increasing success of fantasy sports betting brand FanDuel.
A capital markets day in New York in November 2022 highlighted the growing importance of FanDuel to the overall business. The company expects growth to continue which will lead to it becoming the largest business by revenue and a bigger proportion of the total value of the group.
Consequently, the board believes an additional listing of its shares in the US will provide several benefits to shareholders, including greater liquidity and access to a deeper pool of talent.
Importantly, it would lay the foundations for an eventual primary listing which could enable the shares to be included in US stock indices and attract investment from passive investors.
The board intends to consult ‘extensively’ with shareholders before deciding whether to table a formal resolution. The company made it clear the listing takes priority over any plans to list FanDuel separately.
WHY HAS FLUTTER CHANGED ITS MIND?
In March 2021 the company mulled the idea of floating FanDuel on the Nasdaq market via an initial public offering.
Shares of peer Drarftkings (DKNG:NASDAQ) were riding high touching $72 per share giving it a market capitalization of $28.5 billion, more than Flutter despite its substantial businesses outside the US. It is understandable why Flutter wanted to exploit premium valuations stateside.
However, that proved to be the peak and Draftking’s shares have since dropped by over 77% to $16.14. The discrepancy between valuations has also normalised. Today, Flutter has a market cap of £22 billion, double that of Draftkings.
In November 2022 Flutter upgraded guidance for US revenues of between $2.95 billion and $3.2 billion and an EBITDA (earnings before interest, tax, depreciation, and amortisation) loss of $300 million to $360 million.
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