Bragg Gaming Sale Pushed by Prominent Investor

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Bragg Gaming Group recently saw a surge in its stock value following an investor’s call for strategic changes, including a potential sale.

This week, Jeremy Raper, the founder of Raper Capital, which manages 375,000 shares of Bragg Gaming, published an open letter to Bragg CEO and Chairman Matevz Mazij.

In it, the Japan-based stockbroker and capital trader urged the company to consider selling itself in the near future. Raper argued that selling Bragg could result in a “gargantuan premium,” and ensure “certainty of value” for investors amid what he described as underperformance since its Nasdaq debut in August 2021.

Bragg Gaming, known for its ORYX Gaming brand, provides global online casino and sportsbook technology services. Despite a stock price increase of 44.55% so far in 2023, Bragg currently trades at a value significantly lower than its 2021 peak​​​​.

Sale is Irrefutable Logic, Says Investor

Raper highlighted that Bragg’s stock has struggled to achieve an appropriate valuation in public markets. Bragg’s trading value stands at 5.5x EV/EBITDA, considerably lower than the average 15x ratio observed in recent acquisitions of iGaming companies. Raper’s proposition posits that selling Bragg could be the most effective way to realize a proper return on the underlying business value​​.

“Beyond the pure financial returns available should you pursue this course, I believe there is a persuasive industrial logic to selling the business now,” Raper said in his letter.

“Firstly, consider the cost synergies that would come with selling Bragg to a larger industry competitor – synergies that, as a seller, you would certainly be compensated for delivering to the buyer.”

Strong Q3 2023 from Bragg

In contrast to the investor’s concerns, Bragg Gaming Group reported a strong financial performance for the third quarter of 2023. The company’s revenue rose by 8% year over year to €22.6 million (approximately USD $24.0 million).

The adjusted margins also improved significantly, reaching 16.9%. This growth is attributed to a shift in revenue mix towards higher-margin products, including proprietary content and turn-key Player Account Management (PAM).

“Our strategic initiatives have helped position Bragg as a must-have content supplier for leading global iGaming operators, further building our foundation from which we can deliver consistent profitable growth,” said Bragg’s CEO, Matevž Mazij, in the company earnings report.

“We are confident we have the right strategies, balance sheet, and infrastructure in place to further our business momentum as we continue to successfully execute on our strategies that are generating cash flow growth and creating new value for our shareholders.”

Bragg Expands, But Sale Still Possible

The introduction of 12 new proprietary and exclusive third-party games in the largest regulated U.S. online casino markets was just some of what Bragg got up to this year.

It recently signed a deal with one of the leading U.S online sportsbooks, FanDuel, to supply technology for the operator’s Connecticut and Michigan online casinos. It also inked agreements with BetMGM for New Jersey online casino gaming.

Elsewhere, Bragg continued its expansion in Europe and other markets. In the past year, it launched 15 more games and signed deals with 888 and Kindred for market access across various European countries.

These new launches underscore the operator’s continued efforts to bolster its market presence and profitability. Additionally, Bragg is the leading Privileged Access Management software supplier (PAM) in the Netherlands, serving operators generating approximately 30% of the gross gaming revenue in the market.

However, despite all that positivity, Raper still thinks it could be time for a sale.

“What you have built, first at Oryx and now at Bragg, constitutes a highly desirable, unique suite of iGaming content and distribution assets that, for various reasons, has been ignored by the public markets for far, far too long,” his letter said.

“A stasis that, if uncorrected, may actually compromise the Company’s continued bright growth prospects and risk much of the value you have created thus far. By calling for a sale of the company now, I only seek to preserve, and finally unlock, that latent value for the benefit of all stakeholders.”

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