An investment vehicle backed by a host of former board directors of gambling group GVC, including onetime chief executive Kenny Alexander, has taken a 6.5 per cent stake in William Hill owner 888, spotting an opportunity in the bookmaker’s low share price.
FS Gaming Investments has also received the backing of GVC’s former chair Lee Feldman and Shay Segev, Alexander’s successor who oversaw GVC’s takeover of Ladbrokes and the creation of Entain. Segev, who now runs streaming service DAZN, ceded his voting rights to the group.
The investor group, which revealed its 6.57 per cent stake on Tuesday, believes that 888’s stock is hugely undervalued because of a series of compliance failings and due to the large debt pile following its £1.95bn takeover of William Hill.
Earlier this year, 888 froze £50mn worth of customer accounts after revealing they did not comply with money-laundering processes and its chief executive was forced out on the same day.
888 has since reinstated the accounts following an internal investigation but is still hunting for a replacement chief executive. For now, Lord Jonathan Mendelsohn, a Labour peer and 888’s chair, is running the company on an interim basis alongside finance chief Yariv Dafna.
Shares in the London-listed group, which was ejected from the FTSE 350 index earlier this year, were up 14 per cent to 80p following the disclosure. However, the stock is still down 60 per cent over the past year.
The investor group has yet to meet 888 management but is likely to push for a speedier integration between 888 and William Hill to drive down costs, and could request a board seat for Alexander or Feldman, according to two people familiar with the matter.
In the longer term, 888 could be a target for a partial sale or a takeover by another betting group or by private equity, people close to investor group acknowledged. “It’s a really quality, undervalued asset,” said one person involved. “There’s some top-quality brands and top-quality people in the business.”
Alexander’s involvement in the investment vehicle marks his first venture into the betting industry since his surprise exit from GVC in 2020 when he announced his retirement after 13 years as chief executive, where he gained the reputation as a towering figure in the industry.
His departure was overshadowed by UK tax authorities launching an investigation into corporate wrongdoing and bribery at GVC’s former Turkish subsidiary Sportingbet. Alexander oversaw the purchase of Sportingbet in 2011 and its eventual sale six years later.
Stephen Morana, a partner at venture capital fund KM Capital and a former Entain independent board director, and investment bank B. Riley Financial and its finance chief Daniel Shribman, are also involved in the investor group.
An 888 spokesperson said: “We welcome the investment of FS Gaming which we believe reflects the significant value creation potential in our business.” They added that the board remains “highly confident in its long-term strategy to maximise value for shareholders”.
