Betfair, the world's largest online betting exchange, has ended months of speculation by taking the first step towards a very sizeable flotation.
The company is part-owned by Benchmark Capital, the venture capital company where former Esat chief executive Barry Maloney is a director.
London-based Betfair said last night that it had appointed Goldman Sachs and Morgan Stanley as financial advisers.
The company did not expand on the reasons for the appointment, but it is accepted that the two investment banks will guide Betfair through the various options for a change in its status.
A spokeswoman said no decision on a flotation had yet been made. It is believed that a further announcement from Betfair will come at some stage in the autumn, with any flotation to happen next year.
Estimates for the probable value of Betfair at flotation differ, ranging between £500 million (€727.2 million) and £700 million sterling.
At £500 million, Benchmark's stake of about 7 per cent would be valued at £35 million.
The venture capital company became involved with Betfair through an earlier investment in a rival online betting exchange, Flutter.com.
Flutter raised £27 million from investors before merging with Betfair in early 2001. It then took on the Betfair name and Benchmark's investment rolled over.
Last month Betfair posted an 87 per cent increase in underlying full-year profits, a performance which added fuel to rumours of a planned flotation.
The firm's profits rose to £22.3 million as revenues increased by 61 per cent to £107 million. It is free of debt.
Earlier this year the five-year-old company had 95,000 customers. It is a pioneer of the betting exchange concept, which allows punters to choose their own odds and bet against each other.
Betfair claims to process more than three million transactions per day, or more than 12,000 bets per minute at busy times. It is licensed in the UK, Austria and Malta and is seeking authorisation in other parts of the EU, in Australia and South Africa.
The company is primarily internet-based but also offers a telephone service. It is currently developing a poker business.
As well as counting Benchmark among its backers, Betfair is also supported by JP Morgan Partners and UBS Capital.
The investment climate for companies such as Betfair is red-hot at the moment, as proved by last month's £1 billion flotation of online poker company Partygaming. This was preceded by the equally successful £514 million flotation of Empire Online.
Other firms in the sector seen as likely candidates for flotation include Gibraltar-based 888.com.
