Betfair v Ocado - battle of the tech lPOs


Betfair, the online betting company, has confirmed this week that it is hoping to list at least 10% of the company before the end of October. This IPO will potentially provide an interesting case to compare and contrast with Ocado, the online grocer whose listing completed earlier in the summer.

Both companies prior to their listings have made references to aiming for a market capitalisation of over £1billion. The reality being that Ocado got nowhere close to that figure and has been trading lower than its listing price.

Both companies are heavily reliant upon technology and both companies target customers who want to use the internet for services that previously required an in-person visit to premises. In addition neither company had a physical base i.e. stores in the case of Ocado and shops in the case of Betfair.

There are however two fairly substantial differences that I believe will be the key and should mean that the Betfair IPO becomes the more successful: Betfair has consistently made profits during its 10-year life - Ocado has not! Betfair has positioned itself as a technology company and would appear to be targeting institutional investors specialising in the tech sector, whereas Ocado seemed to focus more on being an online retailer rather than pushing its technology to the forefront in its pre-IPO marketing.

What's more Betfair's key competitors already have online services prior to its planned IPO. It is unlikely that one of its major shareholders will expand into a competing service not long after its listing, as Waitrose has done to Ocado in expanding its own online delivery service.

Still, in current times no matter how strong the company the markets will do what the markets will do.