By Ruth David and William Canny
An unidentified investor sold a stake worth approximately €136m in Playtech about two weeks before the UK gambling and financial software company reported a profit warning that sent the stock tumbling, sources said.
Goldman Sachs’ trading desk began to market the stake on June 14, and the seller was a US hedge fund, according to sources.
A June 19 filing showed that Morgan Stanley had reduced its stake in Playtech from 5% to below 3%. Morgan Stanley held the shares on behalf of an investor, sources said.
Playtech, backed by billionaire Teddy Sagi, announced a profit warning on July 2 citing competitive pressures in Asia, which sent its shares tumbling 26%. They are down more than 30% since the day before the announcement. The block of shares that changed hands in Playtech around the sale was about 14 million shares, or around 4%. The average daily volume traded in Playtech is around 1.6 million shares.
Playtech said in July that competitors in Asia were driving a “particularly aggressive pricing environment” which hurt revenue. “Given the recent decline and in the absence of any change in market dynamics, we expect a significant impact on revenue throughout the rest of the year,” it said. That impact could lower revenue from Asia by about €70m compared to original expectations.
The company’s management and others with access to material information are prevented by European regulations from selling shares for 30 days before interim or year-end financial reports. Other investors don’t have specific restrictions unless they’re in possession of insider knowledge. Playtech shares fell 5% at one stage in the latest session, valuing the firm at £1.64bn (€1.8bn).