M&A: CEO calls for alternatives to Bragg Gaming Group’s strategy

Lea Hogg November 27, 2023

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M&A: CEO calls for alternatives to Bragg Gaming Group’s strategy

Raper Capital’s CEO, Jeremy Raper, (in photo above), has taken a decisive stance on the future of Bragg Gaming Group, releasing an open letter to Bragg’s CEO, Matevz Mazij. The letter doesn’t mince words as Raper calls for the immediate pursuit of strategic alternatives, including a potential full or partial sale of the company’s assets. The driving force behind this bold recommendation is the persistent undervaluation of Bragg’s stock, which currently sits 25 percent below its value at the time of the Oryx acquisition.

Raper expresses frustration over what he sees as a discrepancy between Bragg’s impressive growth and its lagging stock performance. Despite a remarkable fourfold increase in revenue and an astonishing 14-fold rise in adjusted EBITDA since the Oryx acquisition, the market has not reflected these achievements in the company’s valuation. This dissonance prompts Raper to assert that the public markets have failed to recognize the intrinsic value of Bragg, necessitating a strategic re-evaluation.

Divergence in growth and valuation

The crux of Raper’s argument lies in the divergence between Bragg’s growth metrics and its stock performance. The open letter underscores the disconnect, highlighting the market’s failure to accord fair value despite the company’s robust financial performance. Raper contends that a sale to a third-party is the only viable means to materialize a proper return for the underlying business value, positioning it as the last, best course available to the company.

Raper Capital’s vision for Bragg’s assets

Contrary to the market’s skepticism, Raper expresses confidence in the potential interest in Bragg’s assets and platform. Citing data on comparable transactions from the last 24 months, he points to an average 19x Enterprise Value/EBITDA and 15x EV/EBIDTA sale price for iGaming M&A deals. Even a sale at the lower end of this spectrum, around 12x EV/EBITDA, would represent a substantial 150 percent premium over recent trade prices, making a third-party sale an attractive option.

Unlocking value for stakeholders

Raper concludes the open letter by emphasizing the importance of considering strategic alternatives in the current market environment. He underscores the inescapable cost of capital realities faced by Bragg, making further equity-funded inorganic growth a challenging proposition. Calling for a sale, Raper aims to preserve and finally unlock the latent value that Bragg’s iGaming content and distribution assets have accumulated over the years.

Since its inception, Bragg Gaming Group has weathered the complexities of the iGaming industry with resilience and adaptability. As discussions around its future unfold, the company stands at a pivotal moment, poised to leverage its strengths and unlock new opportunities for stakeholders.

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