888 CEO affirms need for African JV independence amid post-Hills realignment
Itai Pazner suggests London-listed operator could take majority ownership stake once business reaches maturity
888 CEO Itai Pazner has stated his confidence in the group’s 888AFRICA joint venture (JV) business, suggesting that the London-listed operator could take full ownership of the business in the future.
Speaking to EGR following the group’s Capital Markets Day, Pazner lauded the performance of the 888bet brand since its launch across its first four African markets in October.
Central to that success, Pazner suggested, is the need for 888 to leave the business largely to its own devices as it looks to generate a dominant position in the African market.
“At the moment, we believe that this business needs its independence at a high level, the need to move fast, be flexible and more independent,” Pazner told EGR.
“That’s the most effective way to deal with an emerging market that’s very different from your core markets.
“If you take 888 or William Hill’s capabilities and products, trying to bring them into a market that operates very differently, it takes a lot of time. It’s very disruptive and has a high chance of not succeeding,” he added.
Created in March, 888Africa is staffed by a number of industry veterans, including ex-The Stars Group (TSG) alumni Christopher Coyne, the JV’s first CEO, as well as former TSG sportsbook MD Andrew Lee and Voxbet chairman Ian Marmion.
The five-strong group is rounded out by former William Hill and Editec Online chief product officer Alex Rutherford and Helen Scott-Allen, who was previously CFO of Premier Bet.
888Africa currently operates in four markets: Tanzania, Zambia, Mozambique and Kenya, with internal estimates suggesting these markets could grow by a compound annual growth rate in excess of 20% by 2026 and a total addressable market of £1bn.
The business ethos is aimed at “delivering a lower capital-intensive route” to potentially large value creation in these markets.
Discussing the makeup of the business, Pazner reaffirmed this need for independence, but also for experienced hands to guide the JV going forward.
“The principle with 888Africa was about taking a team that’s focused, knows the market and uses a third-party platform. It’s not about adding to the platform at the moment and letting them expand the business,” Pazner said.
“At some stage when we feel that and the maturity of that business is in the right phase, it will make sense to integrate them into the wider group. We have the option to do that, and essentially, take the majority position in that business,” he added.
As part of its investment into the business, 888 has the option to increase its minority stake, currently under 20% to a full ownership of the 888Africa business, should it wish to do so.
Pazner would not be drawn on when this acquisition could potentially take place, suggesting it would come down to the performance of the business over time.
“There isn’t any specific point or right place. I think it’s down to a level of maturity, level of scale, level of readiness of our product, and capabilities to go into the African market. Then that would be the right time to take majority ownership of the business,” he explained.
At a wider level, 888’s Capital Markets Day presentation saw the group disclose sizable debts due in part to a combination of wider macroeconomic conditions and rising interest rates, as well as £347m of bank loans financed as part of the William Hill deal.
These debts have seen a realignment of the 888 business at all levels targeting an improved operational model, arising from the Hills integration, and greater efficiencies of scale. The group aims to achieve a revenue target of £2bn by 2025 following these changes.
The realignment seemingly rules 888 out from making any immediate M&A leaps following the Hills deal, a reality not lost on Pazner, who suggested only the best M&A opportunities would prompt action.
“We made it very clear that our focus now is integration and deleveraging, and not doing further M&A for now. We never exclude it, there could be an opportunity out there that’s right for us,” Pazner told EGR.
“In any case, in terms of debt, our debt level now is high. We need to deleverage and therefore adding more debt to do acquisitions doesn’t make sense. But we are not ruling out different forms of partnerships and strategic opportunities, just like we did with Africa,” he added.