Paddy Power Betfair acquires Georgian operator Adjarabet
PPB takes a controlling stake in the operator for £101m with plans to acquire the remaining 49% after three years
Paddy Power Betfair (PPB) has acquired a controlling stake in Georgia-facing online operator Adjarabet for £101m in an effort to diversify PPB’s European online business.
The deal will see PPB acquire a 51% stake in Adjarabet with plans to acquire the remaining 49% after three years at a valuation equivalent to 7x Adjarabet’s 2021 EBITDA.
Tbilisi-based Adjarabet generated revenues of 215m Georgian Lari (GEL) (£64m) and EBITDA of GEL68m (£20m) in 2018.
Credit: Paddy Power Betfair
Peter Jackson, CEO of PPB, said: “This bolt-on acquisition is in line with our strategy of establishing podium positions in attractive online markets.
He added: “Adjarabet’s leading brand presence and strong management team has established it as the clear number one in the fast-growing, regulated online Georgian market.
“Together with our Group’s technology and sports capabilities, we are confident that Adjarabet will be strongly positioned to continue to build on this success”.
According to a statement released this morning, Adjarabet curently has a 40% share of Georgia’s online market, which is estimated to have grown at a CAGR of 40% within two years to £180m last year.
In 2017, Adjarabet launched in the regulated Armenian online market and accrued a c.10% market share by the end of 2018.
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Fellow listed operator GVC Holdings entered the Georgian gaming market with an acquisition of its own last year.
GVC praised the performance of Crystalbet in its summer trading update, with wagers up 45% year-on-year and net gaming revenue up by 83%. GVC CEO Kenny Alexander said he would love to do two or three Crystalbet type acquisitions a year.
Regulus Partners said the deals were comparable, although GVC paid 6.7x earnings for its entry stake vs. PPB’s 9.9x.
“Adjarabet however has the benefit of being the market leader at c. 20% bigger than Crystalbet in historical revenue terms, although Crystalbet is catching up to Adjarabet’s current run-rate due to the addition of casino content post-acquisition,” the analyst said.
Regulus also likened Adjarabet to a “Georgian Sky Bet” thanks to its links with Adjaranet, Georgia’s biggest online content site.