Johannesburg-listed entertainment broadcaster MultiChoice Group is increasing its holding in pan-African sports betting venture BetKing to 49%.
This follows a deal last October where it had picked up a 20% stake in BetKing for $81 million. The deal would more than double the valuation of BetKing.
BetKing is run by Blue Lake Ventures Ltd offering online services in Nigeria, Kenya and Ethiopia, and agency services in Nigeria. It offers sports betting in football, hockey, cricket, tennis and basketball, besides virtual games such as Kings’ League and Colour-Colour.
The proposed deal involves three steps, starting with the creation of a BetKing employee stock option plan (ESOP) with a pool of 10% equity. This would dilute MultiChoice’s existing shareholding to 18%.
This will be followed by the acquisition of a 9.6% stake in BetKing for $100 million by MultiChoice as part of an equity raise to fund BetKing’s expansion and medium-term business plan.
In the final leg, it will buy an additional 21.4% stake in BetKing from partially exiting minority shareholders for $181.5 million. This will be at the same valuation as the equity issuance, resulting in MultiChoice’s shareholding increasing to 49%.
As a result of the above transactions, the earnout as part of the original 20% investment deal last year will be triggered and a further $31 million will be payable, MultiChoice said.
This will require MultiChoice to raise ZAR4 billion ($295 million) in South Africa rand-denominated debt, it added.
The company said that pursuing an adjacency such as sports betting creates a natural extension to the MultiChoice video entertainment platform to enhance its product offering. It added that the global sports betting market is experiencing a surge in growth, fuelled by its legalisation in the US in 2018.
According to a recent report by Technavio, sports betting is set to grow by more than $134 billion between 2020 and 2024, representing annualized growth of 10%. As Africa currently comprises only 2% of global sports betting revenue, it is poised for significant momentum as it begins to play catch up.
“By leveraging its own proprietary technology which allows it to adapt to the unique challenges of each market, BetKing is particularly well positioned to capture a large share of the African growth opportunity,” MultiChoice said.
MultiChoice is the parent of a string of properties including sports broadcaster SuperSport, video entertainment company DStv, TV platform GOtv, multi-channel network M-Net, OTT Showmax and software security technology firm Irdeto.