American land-based and iGaming behemoth Scientific Games Corporation has reportedly started discussions regarding the advantages of floating its global lottery business on the Australian Securities Exchange.
According to a Wednesday report from The Australian Financial Review newspaper, the talks come only a week after the Las Vegas-headquartered firm detailed that it was to investigate several options regarding a possible divestiture of its lottery and sportsbetting interests. The source explained that this dialogue is still thought to be at the initial pitching stage but may eventually lead to the launch of an initial public offering that could see Scientific Games Corporation bring in at least $3.7 billion.
The newspaper reported that such a move from Scientific Games Corporation would represent one of the biggest non-privatization initial public offerings in the history of the Sydney-based bourse and place the endeavor in the same territory as the almost $4.3 billion undertaking completed by the government-backed Medibank Private Limited in 2014. The around $7.4 billion float from telecommunications giant Telstra Corporation Limited in 1997 purportedly remains the largest such action for the Australian Securities Exchange while Latitude Financial Services holds down the top spot so far this year at about $1.9 billion courtesy of its late-April listing.
The Australian Financial Review reported that Scientific Games Corporation’s lottery business chalked up earnings before interest, tax, depreciation and amortization last year of approximately $570 million with numerous industry analysts estimating that its actual market value could be up to ten times this figure. Financial services firm Jefferies purportedly used an official note last week to forecast a more conservative valuation of between $3.4 billion to $5.1 billion with a mid-point figure just north of $4.3 billion.
The newspaper reported that Australian bankers will likely be trying to sell their bourse to Scientific Games Corporation as the perfect home for its lottery business courtesy of the market’s previous record of welcoming the likes of casino operators Crown Resorts Limited, The Star Entertainment Group Limited and SkyCity Entertainment Group Limited. Local sportsbetting behemoth Tabcorp Holdings Limited is moreover listed with the Australian Securities Exchange and could well purportedly chose the same home for its soon to be divested lottery and keno arm.
The decision from Scientific Games Corporation to potentially spin off its lottery operation reportedly comes after the Nevada company completed a strategic review of its business led by Australia natives Toni Korsanos and Jamie Odell, who were previously senior executive at New South Wales gaming machines behemoth Aristocrat Leisure Limited. The company is furthermore purportedly backed by Sydney-headquartered Caledonia Investments and would likely be warmly welcomed by the bourse’s large institutional investor community.