IG Index vs Betfair
IG Index released year end results yesterday and they make interesting reading when compared to Betfair. I quite like comparing IG Index and Betfair as they are both spread betting companies, moreso now than ever. Now they are both listed companies, its possible to draw some rough lines around both businesses. Comparisons to IG helped me decide that Betfair was way overvalued when they listed.
Revenues are fairly similar across both businesses but margins at IG are much higher and therefore they have a far bigger market cap than Betfair. They have also been around longer and were first set up to offer bets on the price of gold in 1974, a lot has changed since them. I first bought shares in IG Index when they first floated in 2000, they then de-listed before coming back to the market a couple of years later. They re-floated at £400m and are now ‘worth’ £1.6bn.
Their recent results have been dented by exiting their failing Japanese business but, like Betfair, they are trying to establish themselves elsewhere in the world. But also like Betfair they are being thwarted by all the usual problems. It’s odd to see Betfair try to establish LMAX in this space where competitors are so well funded and established. In contrast IG Index has abandoned it’s sporting business. I think if Betfair had stuck to their true exchange model and worked hard on financials they may have made a decent beachhead in that business. Not so convinced now.
You wonder whether a merger of the two could create quite an interesting business? I can’t see that being on the cards though. But it must have crossed a few minds you would think?
IG Index five year summary: –
https://www.iggroup.com/corporate/
Betfair three year summary: –
https://corporate.betfair.com/investor-relations/
Last set of results: –
https://corporate.betfair.com/investor-relations/f
Category: Betfair
