PointsBet triggers A$400m capital raising exercise as US GGR rockets 1,859%
Australian operator reveals ambition to become “top-five” player in US market with a 10% market share
PointsBet has launched a A$400m (£211.5m/$295.6m) share rights issue with the aim to jumpstart its assault on the US sports betting market.
The Australia-headquartered operator’s share offer comprises two elements: an offering for retail investors and a separate placement of shares with institutional investors.
The fully underwritten retail offering will see the ASX-listed firm’s stock priced at A$8 per share, with PointsBet expecting to raise A$184.9m from the deal.
The offer will be open to eligible retail shareholders in Australia and New Zealand, with the retail offering closing on August 20.
Any entitlements not taken will be offered via a retail shortfall bookbuilding process on August 25, with any proceeds in excess of the entitlement offer price paid back to the respective shareholder.
PointsBet chairman Brett Paton has committed to participating in the offering on shares amounting to A$6m of his eligible entitlement as a PointsBet shareholder.
The institutional offering will take place on July 30 and July 31, with institutional investors who are eligible to buy new shares able to add to their existing portfolios.
As with the retail offering, any institutional shares not taken will be sold via shortfall bookbuild on August 2, with excess proceeds given to the respective shareholder.
The institutional placement of shares is expected to raise A$215.5m, with shares offered at a fixed price of A$10 per share, representing a discount of 11.4% to the A$11.29 closing price of PointsBet on the Australian Stock Exchange on July 28.
PointsBet co-founders Andrew and Nicholas Fahey and Sam Swannell have agreed to offload a total of 2.9 million shares in PointsBet at A$10.00 per share, representing 15% of their respective interests in the PointsBet business.
The sell-down by the PointsBet founders represents 1.4% of total shares outstanding in PointsBet prior to the capital raising exercise.
Paton has agreed to purchase 1.45 million of shares sold-down by the co-founders at A$10 per share, with the remainder being sold independently to institutional investors.
Swannell, who serves as PointsBet’s MD and CEO, has agreed not to dispose of any further shares in the business for a period of 12 months following the capital raise.
PointsBet has said the capital raising exercise will provide funding to support US expansion plans in the areas of marketing and client expansion, as well as technology and product development across the sports betting and igaming verticals.
In addition, monies raised will be used to pay market access and licensing fees to fund operational and personnel scaling and to strengthen the firm’s balance sheet.
Addressing the capital raise, Swannell revealed PointsBet’s intention to be live in at least 19 North American states or provinces by December 2022.
“Since inception, PointsBet’s board and management have been working to establish and consolidate the key building blocks that have put us in the strong position we are today to pursue the expansion of the North American sports betting and igaming opportunity,” Swannell said.
“The North American sports betting and igaming market could be a US$54bn revenue opportunity by 2033 and our strategy is to continue to invest to become a top-five player in this market, targeting a 10% market share in all key North American jurisdictions.
“The capital raising will position PointsBet to execute this strategy,” Swannell added.
News of the share offering came on the same day as PointsBet’s financial year Q4 2021 results, with the operator reporting a 1,859% year on year (YOY) increase in gross win (GGR) derived from the US division, which hit A$32.3m during the quarter.
Gross win from PointsBet’s native Australian division increased by 60% YOY during Q4 FY 2021 to A$66.4m, with overall gross win across the entire business rising by 128% YOY to A$98.7m.
The firm’s gross win margin fell slightly by 2.4% year on year to 10% from a prior FY 2020 high of 12.4%.
PointsBet’s total handle jumped 63% YOY from A$302.9m during Q4 FY 2020 to A$494.8m in the corresponding period of FY 2021.
For the 12 months ending June 30, the business had 196,585 so-called cash active clients, up 117% YOY. PointsBet’s US operations had 159,321 cash active clients during the same period, an increase of 661% on FY 2020’s figures.