Earnings+More - The last resort
Quit holdin' out and draw another breath. London callingYou know I love a London boy: The failure of Games Global to go through with its $2.13bn New York listing plan was a blow for the sector, given it was destined to be the largest betting and gaming sector public market event of the year. One door opens: The pulling of the float, coming barely a month after the gaming supplier announced its intention to go public, showed just how difficult companies were finding the public company space and follows on from a number of either failed or struggling New York listings.
You know what they said, well some of it was true: London’s heyday as a listings hub for both domestic and globally focused online and land-based betting and gaming companies came in the mid-2000s, when companies such as PartyGaming, 888 and Playtech alongside then domestic betting giants such as Ladbrokes, William Hill and Betfair found a listed home on the London Stock Exchange.
On a rainy night in Soho: As it stands, due to the impact in the past three years or more of regulatory pressures in the UK and what might be termed a wider backdrop of UK investor apathy, it is difficult to make a case for London once again being a vibrant market for any gaming entity to make the UK its listing domicile.
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Against the tide: One corporate financier pointed out the UK market has been struggling to counter a number of headwinds, from Brexit to higher inflation, the war in the Ukraine and the outflow of cash from equity funds.
In a LinkedIn posting, Charles Hall, head of research at Peel Hunt, said the UK market has to “stimulate increased domestic demand – from pension reform to encouraging retail investors through a UK ISA to establishing a UK national wealth fund.” On a recent Peel Hunt podcast with Hall, Jon Prideaux, director and former CEO at UK-listed payments outfit Boku, said the regulations involved in being a public company were putting companies off going down the public route.
Location, location, location: But the good news for the UK – such as it is and despite the high-profile defection of companies such as Flutter – is, as Prideaux puts it, the US stock market is “arguably more broken than the UK.”
Hence, if the FCA acts to make the market more user-friendly, it will play into what Prideaux says is a “sustainable competitive advantage” that London has over New York, which is that it can cost-effectively support a public company at a smaller scale.
The circle and district lineYou just haven’t earned it yet, baby: In the wider UK-listed realm, one corporate advisor says, there has been something of a re-rating but that doesn’t hold true for the betting and gaming sector, which, as far as investors are concerned, remains mired in continued regulatory uncertainty.
Atlantic crossing: Another pain point for sector proponents is the extent to which in the last five years New York has been the only game in town for betting and gaming floats. Companies that might once have sought a listing in London – Super Group, Sportradar, Gambling.com, Genius Sports spring to mind – have instead beaten a path across the Atlantic.
Show me the money: Yet, the track record of recent betting and gaming-related floats is mixed. Many exploited the now out-of-favor SPAC route to hasten their pathway to a listing and have struggled to gain traction with investors who are more interested in the US narrative rather than hearing about global ambitions. Size matters: Moreover, unless a company is of a certain size, it is in danger of being ignored by US investors. “If a company lists in the US and it is less than $1bn in market cap, it will get zero investor interest,” according to one capital markets source.
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Join top operators at opticodds.com/contact It’s a London thingEliminate the impossible: If New York is no longer truly an option for many, it leaves companies seeking an IPO with few realistic options. Still got it: “Maybe it is a bit biased but I would say the London market as a listing venue has a demonstrably world-leading record in bringing gambling sector companies to market and enabling access to capital for them to execute their strategies and achieve growth to a level
This is the world calling: Historically, London has excelled in the past in attracting companies with a focus outside of the UK. Think PartyGaming and the original incarnation of 888, for instance, or Playtech.
Buy British: But while the UK listing rules are likely to be loosened in the coming months, the corporate financier warns that those looking at a potential listing in London should still view any move as a strong commitment to UK listing standards.
Further reading: a cautious revival of the London IPO market. Further listening: Why a potential $64bn London IPO is controversial. The big dealPenn and ink: Recent activist investor activity and unease over the company’s mishandling of the online opportunity allied to upset over executive pay could yet be the precursor to a bid, with Boyd Gaming and Hard Rock the names in the frame Read E+M’s recent coverage:
+More dealsElys BMG has sold its Italian-facing operation Newgioco to an undisclosed buyer for an undisclosed sum. Newgioco is a minor player in the Italian market. In Elys BMG’s last communication, the company said its Q1 earnings report was delayed, telling the SEC it was unable to complete its 10Q in time. Buzz Bingo is in discussions to buy two Merkur bingo clubs in Cricklewood, London, and Northampton for a rumored £15m-£20m from owner Gauselmann.
Calendar
Venture capital firm Yolo Investments manages in excess of €500m in capital across 100 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. An +More Media publication. For sponsorship inquiries email scott@andmore.media. |
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Poisoned Penn
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Divide and rule
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