21.03.2024

by Mateusz Mazur

Penta Investments Contemplates Fortuna Entertainment Group Sale

Penta Investments is currently exploring the potential sale of its betting and gaming subsidiary, Fortuna Entertainment Group.

With the assistance of financial services giant JPMorgan, the firm is evaluating various strategic options for what is regarded as the leading betting company in Central and Eastern Europe. This decision was confirmed by a spokesperson for Penta Investments in a recent communication with Reuters.

Fortuna Entertainment Group, known for its extensive operations in countries such as the Czech Republic, Slovakia, Poland, Croatia, and Romania, might be valued at up to 2 billion euros ($2.17 billion). This valuation underscores the significant footprint and influence Fortuna has established in the regional betting market.

The process of considering a sale is still in its preliminary stages, with Penta Investments expected to initiate an auction process by the end of the summer. “This step highlights Penta’s dedication to thoroughly exploring different paths for the franchise’s future, aiming for sustainable growth and long-term value creation,” said a spokesperson for Penta Investments.

However, officials from JPMorgan have opted not to comment on the matter, and Fortuna has not immediately responded to inquiries for comment.

Potential Buyers and Market Dynamics

The betting and gaming industry landscape is shifting, with regulatory changes in markets like the UK and Ireland affecting sector valuations due to a push towards mitigating problem gambling. Additionally, the burden of higher borrowing costs, particularly for larger operators who have expanded through acquisitions, is influencing company valuations.

In this context, Fortuna’s sale is attracting attention from potential buyers, which are expected to include leading European gambling operators and private equity firms with existing investments in the sector. Fortuna’s financial health, with projected annual earnings before interest, taxes, depreciation, and amortisation (EBITDA) of about 200 million euros, makes it an attractive proposition for interested parties.

Penta Investments’ decision to consider selling Fortuna comes at a time when the industry is experiencing valuation pressures, and companies like UK-listed Entain are reassessing their international brand strategies amid activist investor scrutiny.

Penta’s Strategic Moves

Since its inception in 1994, the Czech-Slovak private equity group Penta Investments has grown significantly, with 14 billion euros in assets under management. The group focuses on long-term investments across various sectors, including healthcare, financial services, manufacturing, retail, media, and real estate. Penta’s strategic move to potentially divest Fortuna, taken off the Prague and Warsaw stock exchanges in 2018, marks another significant phase in its evolving investment portfolio.

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