A multimillion dollar business with 90 per cent of the clients US-based, while the service providers are outside the country's borders. Head office in Gibraltar, marketing office in London, computer servers in Canada and Gibraltar and business processing centre in Hyderabad-welcome to PartyGaming, the latest love child of globalisation and the source of considerable headache to the United States Department of Justice.

THE INDIA CONNECTIONS

ANURAG DIKSHIT Group Operations Director IIT Delhi (1994) VIKRANT BHARGAVA Group Marketing Director IIT Delhi (1994) IIM Calcutta DEEPENDRA BHARTARI Director of Transaction Services IIT RUPAM DEB Director of Marketing (Offline) IIM Calcutta MANISH GROVER Director of Customer Services IIM Calcutta NITIN JAIN Director of Technology IIM Calcutta PRASAD KONDRU IVY Comptech's CEO IIM Calcutta RAVEEDRANATH KAMATH Group's Director of Management Information Systems IIT Kharagpur KEDAR CHAUDARY IVY Comptech's Director of Technology IIT Kharagpur

The online gaming company has married the information technology skills of Indian Anurag Dikshit, 33, with the entrepreneurship of American Ruth Parasol, a veteran in the murky world of Internet porn. The firm, whose activities are technically illegal within the borders of the US, is the marquee public offering to hit the London Stock Exchange in the past four years. The 20.2 per cent offering of the company's equity valued at $9.3 billion (Rs 40,000 crore) turned the fortunes of the promoters (see box). It was also a leg up for Deutsche Kleinwort Wasserstein, which leads a clutch of underwriting banks-Bayerische Hypo-und Vereinsbank, Calyon, Commerzbank, Enskilda Securities, ING and Mediobanca-Banca di Credito Finanziario.

Amid talk about the massive size of the offering, the notoriety of Parasol and the conflict between the US and the online gaming business, Dikshit has managed to steer clear of the spotlight in spite of being the company's largest shareholder (31.6 per cent) and also its group operations director. Dikshit, after stints at CMC, Websci and AT&T, joined the company in 1998.

Dikshit was commissioned as a programmer by Parasol, who, with her profits generated from the porn business, had just created Starluck Casino. The IIT Delhi computer sciences graduate (1994) quickly foresaw the online gaming boom and turned investor in the company. Soon, he teamed up with batchmate Vikrant Bhargava, 32, a graduate in chemical engineering and an alumnus of the Indian Institute of Management, Calcutta. Bhargava is currently a 9 per cent stakeholder. Egged on by the then Andhra Pradesh chief minister N. Chandrababu Naidu, the duo decided to set up the back office operations in Hyderabad.

Living up to the archetypal dotcom dream, they set up Cysphere with a focus on creating the software for their online gaming venture. However, things did not go as expected. They realised they were ahead of the curve in India and soon returned to the US. But the departure from Hyderabad did not mark the end. With broadband Internet taking off, it was not long before the fortunes of online gaming too changed.

In the following few years, Dikshit and Bhargava brought in more Indians into the company-all IIT and IIM alumni. According to the 200-page prospectus issued to institutional investors, besides Dikshit and Bhargava, there are seven other Indians in the "senior management", of whom only Nitin Jain, director of technology, is a significant shareholder with a 1.1 per cent stake. An electronics engineering graduate from the Punjab Engineering College and an MBA in systems and finance from IIM Calcutta, Jain also happens to be principal shareholder Dikshit's brother-in-law. Dikshit and Bhargava control their stakes indirectly through Crystal Ventures Unlimited and Coral Ventures Unlimited respectively.

ALL IN A DAY'S WORK

On June 27, the first day of trading on the London Stock Exchange, PartyGaming's shares surged by 11 per cent to 129 pence (Rs 98.50). At this price, the market cap of the share was valued at £5.16 billion (Rs 39,000 crore). The pricing was just below the midpoint of PartyGaming's indicative range of 111 pence to 127 pence and the issue was oversubscribed as investors rushed to cash in on the year's hottest deal. The world's largest online gaming company offloaded 20.2 per cent of the equity in its maiden public offering. Not surprisingly, trading volume showed a massive surge and touched almost £600 million-two-thirds the trading volume of £850 million on an average day on the Bombay Stock Exchange. This performance gave it a 52nd ranking on the London Stock Exchange and automatically led to its inclusion in the FTSE 100 index. With a little less than a third of the company's equity ownership under his belt, co-promoter Anurag Dikshit now has a personal equity valuation of about Rs 13,000 crore-sufficiently large to take him into the 10 wealthiest Indians list, which includes the likes of Lakshmi Mittal and Azim Premji.

The company's earnings from online gaming were $222 million in the first quarter this year, up 93 per cent from a year earlier, and operating profit rose by 81 per cent from a year earlier to $128 million-figures that fully justify the annual salaries of the duo, totalling $547,000 and an entitlement to a discretionary bonus with a 50 per cent cap.

Despite repeated efforts, the two were unwilling to grant interviews. Their London spokesman informed India Today that they were busy with the upcoming public offering. Sources close to them hazard that they probably want to avoid unwanted personal attention for security reasons. Though both nurture ambitions at a personal level, their lifestyle is simple. Neither the nature of the business nor flashy associates like Parasol have had any impact on them. In fact, Dikshit is a vegetarian and, like Bhargava, has never gambled.

In the past few years the company has undergone a transformation with some very high-profile sales manoeuvres. They have also invested in a back office operation in Hyderabad by setting up a wholly owned subsidiary, IVY Comptech Private Limited, headed by an IIM alumnus Prasad Kondru, who has served nine years in the IAS. IVY Comptech also supplies software products to other websites.

Strategically, this makes sense. According to gaming consultancy Christiansen Capital, online gaming revenue will rise nearly three fold to $22.7 billion by 2009, reflecting a compound annual growth of 22 per cent. In the same period, the share of online gaming in the global gaming market is expected to more than double from 3.4 per cent to 8.1 per cent.

Having joined the race early, Bhargava and Dikshit clearly have the headstart. The only source of concern would be the US authorities' viewing online gaming as an illegal activity. But, the old pros that they are, they would do well to hold a poker face, no matter what the odds.

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