Good morning. A breaking news special this morning looking at the news from late Tuesday about FS Gaming Investments taking a stake in 888.

A change is gonna come.

Breaking: 888 stake

An investment vehicle led by former GVC chair Lee Feldman and including ex-GVC CEO Kenny Alexander has taken a 6.6% stake in 888.

Getting the old gang back together: An investment vehicle called FS Gaming Investments, which has Feldman, Alexander, Stephen Morana, ex-Betfair, and Daniel Shribman from the investment bank B Riley among its shareholders, has bought a 6.6% stake in 888.

• In an RNS filing FS said Shay Segev, ex-Entain CEO and currently CEO at DAZN, had transferred an existing 2% stake to FS.

• Get active: Bloomberg quoted Feldman as saying the investor would be pushing for change to boost the company’s value.

• “We think these are great assets that are currently undervalued,” Feldman told the news service.

Catalyst: The news sent 888’s shares flying late on Tuesday, up over 14% on the day. This morning, they added a further 18% in early trading. Analysts at Peel Hunt said they believe this group has the “potential to accelerate, catalyse and even direct strategic change”.

🍆 888 gets a boost on news of the FS stake

Recall, 888 is currently without a permanent CEO after previous incumbent Itai Pazner resigned in the wake of its Middle East VIP compliance scandal. The company is currently being led by executive chair Lord Mendelsohn.

• Peel Hunt said the “well-informed” investor group could contribute to finding a new CEO while “accelerating the existing strategy and finding new directions for growth”. 

• “A bid is possible and, if it triggers a refinancing, has potential to create value by reducing the burden of the debt service cost.”

• Beast of burden: In late November, 888 admitted its leverage was stretched by its exposure to rising interest rates.

Deal Talk instants: Sources pointed to the awkward timing of the announcement given the ongoing HMRC investigation into Entain’s previous dealings in Turkey at a time when both Feldman and Alexander were at the top of the-then GVC.

• Just last week, Entain said it was in discussions with HMRC over a potential deferred prosecution agreement and “substantial” fine.

• It is not known whether individuals including former CEO Alexander are also under investigation.

• “I guess that they must believe that 888 can trade its way out from under the debt burden, in which case the equity is very cheap,” said one corporate advisory source. 

• Another source said “these guys are dealmakers… this is opportunistic”.

• “It’s the old GVC playbook. Get company, turn it around. But the size of the debt could be an issue. This is higher stakes.”

** SPONSOR’S MESSAGE ** Venture capital firm Yolo Investments manages in excess of €600m in capital across 80 exciting fintech, gaming and blockchain companies. The Yolo Investments' Gaming fund, regulated by the Guernsey Financial Services Commission, has taken positions in fast-growth suppliers and operators, including Dabble and Enteractive.

Yolo Investments (yolo.io) wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat about innovative products which can plug into our investment ecosystem.

Weekender

Coming up in this week’s Weekender edition on Friday:

• Bottom of the ninth: A’s Vegas bid goes down to the wire.

• Coinbase crisis.

• Sector watch looks at this week’s news on Saudi Arabia’s sporting investments.

Calendar

• Jun 8: Gaming in Holland

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