Betfair CFO, Stephen Morana

Photography: Anton Hammerl

Despite news that the mooted flotations of fashion retailer New Look and London Eye operator Merlin Entertainments have been shelved, rumours that online gaming business Betfair will join the listed world in 2010 continue to gather pace.

Analyst David Buik of BGC Partners summed up New Look and Merlin’s problem with his comment in The Telegraph in February that sentiment, not valuation, stood in the way ­ but he added that he believed a Betfair flotation would be “the only one I can see getting away easily… lots of people have heard of it and there will probably be strong interest from retail investors.” Of course, the company is saying nothing and its chief financial officer, Stephen Morana, isn’t about to break rank.

“The reality is, we are a very successful private company that people want to write about. Being private means one of the options is an IPO, but I think we’ve proven that there are many other options for strategic growth and to get liquidity to shareholders as well,” Morana tells Financial Director. “An IPO remains one of the options that are on the table.”

He refuses to outright deny, though, that a flotation is on the cards, saying only that the business would “do the right thing for the shareholders” and that “at the moment, we’re really focusing on trying to grow the business as best we can” - naturally. Meanwhile, stories abound that Betfair has retained the services of Goldman Sachs and Morgan Stanley to advise it on what is said to be a £1.5bn flotation to happen this Autumn.

Up the ante
That move could give Betfair the financial flexibility to buy up other, small players in its space and would give it the liquidity to fight its case in other, lucrative but untapped markets where some of what it does, such as sports betting, is either illegal or monopolised by local players. Morana has his sights set on Japan and China (whether the fact that Japan’s Softbank is a big shareholder in the business is a help or not is unclear).

Betting legislation abroad is a game changer for the business, as it was in 2005 when its first foray into the possibility of a flotation was canned due to concerns about the health of the industry and the effects of legal challenges to online sports betting from the US.

For Morana, it would be a golden opportunity to lead, though the world’s largest online betting company remains something of an upstart, it into its next natural phase of development, raising both his profile and the work he has done in preparing it for the public stage. He joined the business in 2002 as head of finance (though the title belied the fact that the business had no finance function at that stage) and was made finance director in 2005 by the time a finance team was in place. He became CFO in September 2006, overseeing 70 staff in and out of the UK.

Morana has relished the learning curve of leading and building a growth business from its early stages; his CEO, David Yu, joined shortly before he did and was made CEO the same year Morana was made CFO. “When I joined we had a purchase ledger clerk who came in two days a week and an accounts manager who came in one day a month to reconcile and to pay payroll,” he says. Today, the business relies heavily on its finance staff given its numbers: £250m of client money on deposit through their betting accounts, £4bn in bets through their site each year, $3.1bn in the bank ­ and no debt.

“It’s a hugely complex monster and it’s been the biggest challenge and learning curve,” he says. “I’ve been fortunate enough to be in a position to build that [finance] team.”

Safe bet
He might have been expected to go for the CEO role when it became vacant in 2006 and, to the outside world, having been one of the most senior people in the business and not becoming CEO at that time looked as if Morana had been passed over. The CFO bats this accusation down insisting that he believed Yu’s technology background ­ he had been both chief operating officer and former chief information officer at Betfair and is a fully paid up computer geek, with the relevant scrolls from Stanford and California universities to boot ­ made him the natural candidate, so much so that Morana did not even apply for the role.

“David is one of the most intelligent people I’ve ever come across and can do whatever he needs to very well,” says Morana. “He is probably one of the most sought-after CEOs in the country.” Well, that would be hard to back up with hard evidence, but at least for Morana he has the pleasure of working alongside a CEO he believes in.

And he thinks that the board’s selection has been vindicated many times over. “David’s record since 2006 speaks for itself ­ he has doubled the size of our business. He was definitely the right choice.” Would he want that job one day, say, if the UK’s most sought-after CEO was tempted away? “That’s a difficult one. It’s a case of semantics,” he says cryptically. “I hope to work for David for the foreseeable future and if he was to leave, I think it would be difficult for the company. And I don’t want to worry about all that for now.”