Morgan Grenfell Private Equity has put £45m into one of its portfolio companies, Coral, the internet bookmaking business.
The Financial Times reports that the investment was used by the bookmaking business to cover a £30.4m marketing cost for Eurobet, the online business it bought last year, and interest payments on its £260m debt.
It is believed that Coral’s traditional betting business made an operating profit of £42m in 2000 and Eurobet broke even before the marketing expenditure. But building Eurobet’s brand and interest payments resulted in a £52.2m pre-tax loss in 2000.
Coral was due to go to IPO last year but pulled out because market conditions were not right. A listing could have valued the company at up to £1bn. Morgan Grenfell is understood to be looking to sell the business.