Casino Machine Maker Scientific Games Close to $3 Billion Lotteries IPO in Australia

(Bloomberg) -- Scientific Games Corp., a maker of casino slot machines, is nearing an Australian initial public offering of its global lotteries business that could raise about A$4 billion ($3 billion), according to people familiar with the matter.  

The Las Vegas-based company plans to garner at least A$1.3 billion from cornerstone investors and the rest from others, the people said, asking not to be identified as the information is private. The share sale process, valuing the unit at about 14 times Ebitda, could start as early as this week, they said.

In a June statement, Scientific Games said it was exploring divesting its lotteries and sports-betting units via a merger with a special purpose acquisition company, a sale or a strategic combination with another business, as part of a process to rein in debt. Later, it agreed to sell its sports gambling company OpenBet to Endeavor Group Holdings Inc. for $1.2 billion in cash and stock.  

Scientific Games could decide to pursue an alternative strategic option and there’s no certainty it will proceed with a listing, the people said. A representative for the company declined to comment.

A share sale of that magnitude by the vendor of state lottery tickets and scratch-off games sold in more than 50 countries would make it the largest float in Australia since 2014, when health insurer Medibank Pvt. raised A$5.7 billion, according to data compiled by Bloomberg. 

The current quarter has been replete with local offerings. Planned or priced IPOs include a A$653 million sale by small business lender Judo Capital, A$1.3 billion by investment boutique GQG Partners Inc, and A$371.6 million by steel distributor Vulcan Steel.

The plan for the lotteries unit IPO follows last year’s purchase of billionaire Ronald Perelman’s 34.9% stake in Scientific Games by a group of investors led by Sydney-based Caledonia. 

Scientific Games management has told prospective investors that its instant games business had a 69% share of the $101 billion U.S. market, according to company presentations obtained by Bloomberg News. The company’s retail solutions and systems business in the U.S. dominates about a third of a $184 billion market, and its iLottery business accounts for 13% share of a $26 billion space, according to the company.

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