London's Alternative Investment Market has just seen its first I-gaming float since before America passed the UIGEA. The bold company behind the float -- Hong Kong-based AsianLogic Limited -- sold shares for 112p on Dec. 28 and raised a total of £40.7 million. Tightly bound to Playtech, the company steers clearly away from the U.S. market, focusing instead on another market whose legal environment is essentially untested: Asia and the Pacific.
AsianLogic generates 85 percent of its revenue from I-gaming operations, with the majority of business coming from customers in Singapore and Malaysia. A very small proportion of revenue comes from China, Japan, South Korea, Indonesia and Italy. Online operations have been showing very high growth, with revenue climbing 29 percent in October (compared to the previous month) to reach $6.7 million.
The company's I-gaming operations include Dafa888, Dafapoker, AsianCasino, ZipangCasino, MegaSportCasino and 777Baby. It also operates Tila Casino and Tila Poker, which are licensed in Alderney and target an English-speaking market. The sites are aligned with celebrity spokesperson Tila Tequila -- a model, actress and singer who was MySpace.com's most popular person in 2006 and the subject of MTV's reality TV show "A Shot at Love With Tila Tequila."
All of AsianLogic's I-gaming sites use Playtech software, and the group also operates a casino in the Philippines on behalf of Playtech for the purpose of wagering on live Internet video streams. The casino is run exclusively for Playtech, which offers the stream to its licensees.
AsianLogic founder Tom Hall is a former CEO of Playtech, and he remains very involved in the company. As Business Development Director for Playtech, Hall is "responsible for overseeing Playtech's global customer growth and the development of customized software solutions for the Asian marketplace." Alex Dong, the Business Development Manager for AsianLogic, also has connections to Playtech, having "played an important role in the customization of Playtech's gaming products for the Group and the Asian marketplace."
Auditor Baker Tilly has expressed concern about the group's reliance upon Playtech, noting in its report on AsianLogic's finances that the company "is currently heavily dependent on Playtech Limited, a related party (due to Thomas Alexej Hall being a common executive director of both companies) for the use of its software. If Playtech Limited ceased providing the ESL Group with software or connectivity, then the ESL Group’s operations would be significantly, adversely affected.
"A new five year contract was signed with Playtech Limited on 11 December 2007. The terms of the agreement include a notice period of 120 days which can be given prior to the end of the five years by Playtech Limited. If Playtech Limited gave the minimum required notice period of termination, this may not permit the Group sufficient time to implement alternative IT measures and could result in a loss of software provision to its customers."
AsianLogic also acts as an agent for Playtech in the Asia-Pacific region, introducing new customers to Playtech and receiving a commission based on ongoing royalty revenue. Commissions continue for as long as the licensee remains with Playtech.
AsianLogic intends to use the proceeds of its float to acquire additional online gambling operations and integrate them into its existing operations. The company also plans to use $25 million of the net proceeds of its placing to seed a "Gaming and Gaming Related Technology Fund," which will invest in both public and private businesses.
"AsianLogic Limited offers investors a unique, diversified opportunity to invest in Asian gaming," said a report by AsianLogic's broker Collins Stewart. "We anticipate a 90 percent increase in revenue in 2007 and a further 109 percent increase next year. This high growth is visible given a current run rate of 72 percent of our 2008 sales forecast, with several contracts yet to commence. Once leveraged to the bottom line, gaming net income should show even more dramatic growth of over 300 percent."
Click here to view our more detailed, 7-page company profile of AsianLogic Limited, which provides a thorough overview of the company's history, market, revenue model, strengths, strategy, plans and more.
For an even more thorough look at the company, visit AsianLogic.com to view the 163-page AIM Admission Document (listed under Investor Information; Financial Calendar).