XLMedia begins trading on London’s AIM after oversubscribed placing

Online gaming marketing firm XLMedia plc has begun trading on London’s Alternative Investment Market today following an oversubscribed placing which raised $69.5m (£41.8m).

The company said that the fundraising was “significantly oversubscribed” as it issued 67,026,152 new ordinary shares and 18,330,686 existing ordinary shares at the placing price of 49 pence per share.

With 189,563,652 total shares at admission, this gives the company a market capitalisation of approximately $154.5m (£92.9m) at the placing price.

XLMedia CEO Ory Weihs said: “We are delighted with the strong support shown by investors, which we believe is a positive endorsement of XLMedia's business model, product offering and market opportunity. Our admission to AIM represents a major step forward for our business as we seek to capitalise on a number of high growth opportunities that exist across our business.  

“The team has established a strong operational base over the last six years and our specific expertise within the online gambling sector has enabled us to develop a market leading offering. We are excited by the benefits of being an AIM quoted company and we look forward to enhancing shareholder value.”

The proceeds of the fundraising will be used to fund acquisitions and country specific joint ventures to accelerate organic growth, as well as expansion into new territories and investment in IT systems.

XLMedia believes that it is one of the largest independent online traffic providers to the online gambling industry, generating customer traffic for over 120 online gambling operators including Betsson, Mr. Green, Vera & John and other established industry brands such as 888.com, bet365, Ladbrokes, Unibet and William Hill.

XLMedia controls over 2,000 websites, providing content in 17 languages. The company said that it utilises a variety of business intelligence tools in order to track the flow of traffic to its customers. It also analyses the quality and conversion of such traffic into revenue so as to improve its return on investment as well as provide high quality services to its affiliates.

XLMedia generated revenue of $16.0m for the six months ended June 30th 2013, with approximately 75 per cent of it derived from a lifetime revenue share model. The rest of its revenue was derived from models such as Cost Per Acquisition or fixed payments.

The company has a strong presence in Scandinavia, but intends to expand its operations into jurisdictions where it believes significant opportunities exist, with an initial focus on the US.

XLMedia has already received authorisation from the state regulator in New Jersey enabling it to contract with operators targeting players in that US state on a fixed fee basis and is in the process of applying for a licence which will enable it to operate on a more flexible revenue model based on receiving fees per player referred.

The company has signed agreements with 888.com (for New Jersey) and with Caesars Interactive Entertainment (for New Jersey and Nevada) to serve as an online marketing partner for certain of each entity's respective brands, and is in ongoing discussions with other licensed gambling operators.

In addition, the company believes that its core skill set of digital marketing could readily be transferred to adjacent market verticals, such as specialist financial services including forex, spreadbetting and CFDs, and that, over time, there will be significant opportunities to leverage these skills.

The board's proposed policy is to pay out at least 50 per cent of retained earnings in any financial year by way of dividend.

Shares in XLMedia plc (AIM:XLM) have dropped 2.21 per cent to 59.65 pence per share in London this morning.