Exclusive: Kindred Group CEO Henrik Tjärnström

It’s just two days before Christmas but there’s no rest for Kindred Group chief executive Henrik Tjärnström, who is busy plotting his firm’s plans for 2017 and beyond.

The firm, which earlier in the month performed a corporate rebrand of the business from Unibet Group to Kindred Group, will do well to match the successes of 2016, which culminated in it being crowned EGR Operator of the Year.

“Unfortunately I couldn’t be there on the night but we sent a big team down and it was really great for us to win the Operator of the Year award,” Tjärnström tells EGR Intel, taking time out from his busy schedule. “It’s a reflection of the hard work put in by everybody in the business – a real team effort,” he adds.

What’s in a name?

The subject of rebranding the Group name was initially discussed back in 2005 when the operator bought Mr Bookmaker. But when the decision was taken to consolidate Mr Bookmaker under the Unibet brand that discussion was ended, for the time being at least.

Tjärnström says the firm had for years been enjoying synergy benefits when marketing either the corporate entity or the Unibet consumer-facing brand, but further acquisitions of Maria in 2007 and Bingo.com in 2014 meant the debate resurfaced.

“It suited the purposes at the time to have the Group name the same as the trading name to maximise the synergies from a media and PR perspective,” Tjärnström explains. “So when we did marketing for the Group the consumer brand benefitted from that, and vice versa.

“But it came to a point when we felt there was a better opportunity, both for us internally and also externally, to take the decision to decouple the two things – the Group name and the customer facing brands.

“I appreciate some on the outside may feel it is an unnecessary decision but both the management team and the board feel this is the right time to do this to maximise the benefits of the name change and for us to get better clarity internally where everyone will be employed by Kindred Group.

“The brands are unchanged from an end customer point of view so we feel it is good timing to make the change now and there is no looking back.”

Buy and sell

The case for the rebrand is strengthened by the fact that, following the acquisitions of Stan James and iGame, Kindred now has 13 consumer brands and that tally is more likely to rise than fall, although Tjärnström doesn’t rule out selling any of his current crop.

“It’s a new strategy now with Kindred Group as we have big flexibility to take new brands via acquisition, to grow organically, but also to sell brands that didn’t really work or change it. Already with the iGame brands we eliminated a few of them that were relatively small by combining those and merging the database.

“The Group is much more than Unibet but it is by far our largest brand to date so that [selling Unibet] would be a big move”

“So the Kindred Group name gives us a bigger flexibility to add brands but to also remove brands – but it’s most likely we would be adding more than losing brands.”

Of course dropping Unibet as its corporate name also opens up the opportunity of potentially selling the Unibet operation, and while Tjärnström doesn’t rule this out, he considers it to be an unlikely outcome.

“The Group is much more than Unibet,” he says, “but it is by far our largest brand to date so that [selling Unibet] would be a big move. Also, thinking about scalability and efficiency – I think scale is important to be efficient so I don’t see that as being likely to be honest. Although we definitely have bigger flexibility under Kindred than previously.”

Transformative deal

Tjärnström describes Kindred’s growth to date as “methodical”, with the firm staying away from the transformational deals seen recently among rivals, preferring smaller additions to the Kindred family. He estimates Kindred has been responsible for roughly 10% of M&A transactions in the industry and the firm is likely to continue to be acquisitive.

“We have been active so we get to see a few opportunities coming our way and we can be quite selective in a sense when we look at the potential targets we have good organic growth to fall back on,” he says. “But it is of course still very important in our industry, especially with the transition to dot.country, which means margin pressure is picking up so it is even more important.”

Henrik Tjärnstrom, Kindred Group chief executive

So does that mean Kindred will stick to its tried and trusted formula of making relatively modestly-sized acquisitions? Not necessarily.

“It has worked really well for us to have that strong organic growth, find that strategic bolt-on to widen our footprint then use our growth expertise on that footprint,” Tjärnström says.

“Of course if we do something bigger it will move the needle more in the here and now but it also has to work for the longer term as well. And as we all know, the M&A reality is not always easy especially if you get closer to a merger of equals situation – it can be quite complex.

“I’m not by any means ruling things out but we have to be confident and sure about the long-term opportunity, not just moving things for the short term,” he adds.

Onwards and upwards

There’s no doubting Kindred has had a successful year. The firm has successfully married organic growth with revenue boosts provided by the late 2015 bolt-ons of Stan James and iGame.

“There are some benefits from having two brands in the market but there’s also an argument for one global sports betting brand”

And Tjärnström admits the former still poses a question for the firm – primarily what to do with the Stan James brand. “We are still evaluating that,” he says. “There are some benefits from having two brands in the market but there’s also an argument for one global sports betting brand.

“We have bought into a market with the Stan James brand which is more recognised than Unibet, but at the same time we have invested heavily behind the Unibet brand too and that has been picking up, so if anything it’s about how can we combine the two and under which brand it will be.

“Stan James has a racing heritage and culture while we are coming more from a sports betting history with the Unibet brand, so that is part of the process that we need to manage very carefully so that we can encompass that on one brand if we do so.”

Stan James has yet to be integrated onto the Kindred platform and Tjärnström says the firm is able to do this once ready, with the plan to place all its brands on the single platform.

Branching out

The firm also recently launched Kindred Futures, a vehicle with which it hopes to team up with technology start-ups in order to offer a hand up while also taking learnings for itself. Tjärnström says this may or may not lead to tech-related acquisitions but says the Kindred Group can be home to more than just B2C gaming brands.

“That’s another benefit we get from the new Group name – that we can be more than just consumer facing brands and we can be a holding company for gambling-related assets or indeed other assets related to technology,” he says.

“We are a tech company at the forefront of industry development and with our own proprietary tech platform. We are very much in contact with some firms and have our tentacles out in the tech space to see what kind of features and solutions are coming up in other areas of the tech sector which may be useful to us.”

So with the rebrand it would appear the Kindred Group now has a platform to continue on its current trajectory and move into different avenues, perhaps even a return to B2B following the spin-off of Kambi. However, Tjärnström says the company will always be a B2C gambling business at heart and already has one eye on the 2018 World Cup.

“I see Unibet and Stan James as having an exciting year,” he says. “We are working on features which should be ready for the next World Cup and in the meantime the customer will feel the benefits as and when those features are ready.”

And if Kindred can match last year’s growth, it will almost certainly be eating into the market share of others. Rivals, you have been warned.