On Friday, Israeli gaming marketing company XL Media Ltd.announced that it plans to hold an IPO on London’s Alternative Investment Market (AIM). The company did not disclose how many shares it will issue, or the terms of the offering, but it reportedly plans to raise £18-24 million ($30-40 million) at a company value of £60 million ($100 million), after money.
The underwriter is Cenkos Securities. The IPO will be held within two weeks.
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XL Media is registered in the tax haven of Jersey. It was founded in 2008 to generate traffic to online gaming sites, such as 888 Holding plc (LSE:888). It basically markets the sites to their customers, and collects a commission from the site for bringing new customers. At that point, it is up to the site operator to turn the new customer into an active gambler.
XL Media uses three main marketing techniques: search engine optimization (SEO), or prioritizing sites on search engines; the acquisition of digital media; and activating affiliates. XLMedia’s revenue comes from the sharing of the site’s income from the user XL Media sends it, either a per user commission or a fixed commission.
XL Media already generates user traffic for more than 150 gaming sites, including Scandinavian sites Betsson AB (OMX: BETSB), Mr. Green & Co. AB (OMX: MRG), and Vera & John; British sites Ladbrokes plc (LSE: LAD), Bwin.party Digital Entertainment plc (LSE: BPTY), Bet365.com, and William Hill plc (LSE: WHM), and Israel’s 888. The company sold its Turkish business in October 2013. Following the IPO, it plans to expand from Scandinavia and the UK to other EU countries and the US, which is slowly again allowing online gaming.
78% of XL Media’s income comes from ten customers, with its biggest customer accounting for a quarter of total income.
XL Media was created through the merger of two companies: WebPals, founded by Yaron Nahari and Assaf Levy in 2007; and Traffic, founded by Ory Weihs. Weihs is XL Media’s CEO. Former Ladbrokes CEO Chris Bell is the chairman.
XL Media’s prospectus states that its largest shareholder is WebPals Enterprises LP (WELP), with an 83.2% stake, following by Israeli VC Partners, with 16.8%. Weihs owns 8.2% of the company through his stake in WELP, and that he, Nahari, and Levy own 24.1% altogether. WELP’s largest shareholder is ZEMLH LP, the largest shareholder in which is Zvika Barinboim’s Barinboim Group, according to the Israeli Corporations Authority.
XL Media’s prospectus states that the company will use the net proceeds to acquire synergetic companies in Europe and the US, and to invest in its IT systems. It adds that it will continue to distribute at least half of its annual profits as dividends.
Published by Globes [online], Israel business news – www.globes-online.com