Scientific Games pushes ahead with ASX plans

by Charlotte Lee Last Updated
Scientific Games’ lotteries arm receives varying valuations from investors

International casino giant Scientific Games is looking to list its global lotteries business on the Australian Securities Exchange.

Inside Asian Gaming reports that the company has been in talks with Australia equity capital markets teams to gather their thoughts on the idea, which would represent one of the country’s biggest ever non-privatisation initial public offerings (IPOs).

The move comes after Scientific Games revealed its plans to divest its lottery and sports betting businesses in order to deleverage and provide the resources to further invest in digital.

Those plans follow completion of a strategic review by the Board of Directors to determine how the company could best optimise its portfolio.

Scientific Games said it is also considering strategic alternatives for the divestitures for each business, including an IPO, a combination with a special purpose acquisition company or a strategic combination with another business.

Analysts have valued any such ASX listing of Scientific Games’ lotteries arm, which recently reported earnings before interest, tax, depreciation and amortisation of US$430 million in the past 12 months, at between US$3.44 billion and US$5.16 billion.

Australian bankers are expected to warmly welcome the proposal, which if consummated would see Scientific Games join other ASX-listed gaming firms such as Aristocrat, Tabcorp, Crown Resorts and Star Entertainment Group.

Deleveraging assets helps Scientific Games focus on digital markets

Scientific Games President and chief executive officer Barry Cottle said that the decision to divest “reflects key steps to optimise our portfolio and strengthen our balance sheet by significantly de-levering while also targeting investments in our largest growth opportunities. These steps will accelerate our path to become a content-led growth company focused on leading in both land-based and digital markets.

The Nasdaq-listed company has engaged Sydney-based Jarden Australia to run the numbers on a potential ASX-listing and feed their input into a broader strategic review that’s mulling options to fix up the company’s debt-heavy corporate structure.

An ASX-listing is believed to be just one option on the table, however sources said it was a serious consideration.

Australia’s equity capital markets are open to new floats, shares in fellow gaming companies are trading at all-time highs and Scientific Games has plenty of Australian hooks to help it catch some big domestic investors.

The Australian connections start with Scientific Games executive chairman Jamie Odell, who joined the company’s board in 2020.

Odell is a well known and highly respected Australian gaming company executive, having spent nearly a decade running poker machine maker Aristocrat Leisure and turning it into one of the country’s best performing companies.

Another connection is Sydney based fund manager Caledonia Investments, which spearheaded a consortium that invested US$1 billion in Scientific Games in 2020.

Odell was also part of the consortium, he knew Caledonia well from his days as a major Aristocrat shareholder.

Caledonia, run by Will Vicars and Mike MEssara, now owns 9.8 per cent of the company.

Also involved at Scientific Games is Toni Korsanos, another former Aristocrat Leisure executive now plying her trade on the boards of Crown Resorts and Treasury Wine Estates.

Korsanos is Scientific Games’ executive vice chair.

Jarden advised Odell and Korsanos when they bought it last year.

It remains to be seen whether the casino giant will turn the Australian scoping study into a listing, however fund managers reckon the deal would likely be well received.

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