THE owners of Coral Eurobet, Britain’s third-biggest bookmaker, are preparing to cash out at the top of the gaming market with plans for an £800 million flotation, which could be launched later this year.

The stock market launch is being planned as concern mounts in the betting community of an oversupply of gambling stocks at a time when the gaming industry is anticipating a threat from Olympics-related lottery games.

Coral Eurobet, which has 1,260 betting shops across the UK, appointed Lehman Brothers, the investment bank, at the end of last week to advise on a potential float that would value the business at £2 billion, including its £1.2 billion of debt.

Vaughn Ashdown, the chief executive, is believed to have made more than £50 million from his stake in the business and previous refinancings. Together the management team owns 16 per cent of Coral Eurobet, worth an estimated £128 million.

The timing of the offer has not been decided and will depend on market conditions, but sources suggest a launch later this year. A straight sale of the business remains a possibility, but a float is the preferred option.

A public offering would aim to cash in on the success of recent gambling-related flotations, notably that of PartyGaming, the online poker business whose shares have risen by more than a third since dealings began in June.

However, smaller online gaming groups could saturate the market over the next 12 months, experts say, and there are fears that aggressive marketing of Olympic Games scratchcards could hurt betting firms. A series of National Lottery games and television shows aim to raise £1.5 billion for the Games.

Meanwhile the phenomenal growth of fixed odds betting terminals (FOBTs) — virtual roulette machines that keep punters entertained between races — has begun to slow down.

“The market has begun to get a bit on the toppy side and it will be harder to grow the income stream from FOBTs now the rollout of new machines has effectively stopped,” one industry source said.

However, experts said that, despite these concerns, there was still plenty of scope for growth through internet gambling and a general increase in public interest in betting.

Since 2002 Coral has more than doubled its profits. It made operating profit of £145 million last year on sales of £5.4 billion. It remains highly cash-generative and is still growing fast.

A float would provide an exit for Charterhouse, the private equity group that bought the business for £860 million, including debt, in a management buyout in September 2002.

Charterhouse has already taken an estimated £560 million out of the business so far, following two refinancings.

Sources said that there was no obvious trade buyer for the business unless an overseas player decided to bid, leaving the most likely alternative to a flotation a sale to another private equity player.

Coral refused to comment.

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