Super Group Obtains Purchase Note Before PSPC Agreement Closes


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Posted: Nov 30, 2021, 10:52 a.m.

Last update on: November 30, 2021, 11:15 a.m.

Sports Entertainment Acquisition Corp. (NYSE: SEAH), the Special Purpose Acquisition Company (SPAC) merging with Betway’s parent company, Super Group, is winning praise from a seller’s side. This indicates that there is some enthusiasm for what is likely to be one of the biggest blank checks of the fourth quarter.

Great group
Super Group, Betway’s parent company, receives high praise from the analyst. Its PSPC agreement is expected to be finalized in December. (Picture: The daily mail)

In a note to clients today, Benchmark analyst Mike Hickey begins coverage of Sports Entertainment Acquisition with a “buy” rating and a price target of $ 16, which implies a 45.45% increase over at the end of November 29. This coverage will be transferred to Super Group when it becomes an autonomous public entity. The blank check transaction is expected to close in the current quarter and the gaming operator will be listed on the New York Stock Exchange under the symbol “SGHC”.

The analyst predicts continued growth in the global online gaming market, noting that Super Group’s “highly profitable” internet platform and pragmatic approach to gaining share in new markets gives it “a winning formula for success. continued “.

When the blank check transaction was announced in April, parent company Betway said the deal had a pre-capitalization valuation of $ 4.75 billion. This indicates that Super Group’s merger with Sports Entertainment represents one of the biggest combinations to date between a SPAC and a games company.

Reasons to believe Hickey is right

As the shares of so many DISSPACED companies falter, many in the gaming industry, analysts and investors are increasingly scrutinizing balance sheets and financial strength.

As Super Group comes to market at a time when enthusiasm for the gaming SPAC deals is waning, there is reason to believe that Hickey’s bullish valuation is warranted. As noted above, the company is profitable – a rarity among online sports betting operators.

Super Group is forecasting $ 1.5 billion in net gaming revenue (NGR) this year, with earnings before interest, taxes, depreciation and amortization (EBITDA) of $ 350 million. Those numbers are expected to reach $ 1.7 billion and $ 420 million, respectively, next year.

After closing the deal with Sports Entertainment, Super Group will have $ 200 million in cash on its balance sheet and no debt.

Inside the super group thesis

For investors, one potential source of appeal with Super Group is that the company does not aim to upgrade Betway to FanDuel or DraftKings levels in the United States. This implies that he does not want to engage in a spending war that saps money just to gain market share.

Still, the operator has plans for growth in the United States. When the blank check transaction was announced, Super Group also announced the acquisition of Digital Gaming Corp. (DGC). The purchase of DGC brings additional market access to up to 10 states, including Colorado, Indiana, Iowa, New Jersey and Pennsylvania, and this could apply to both iGaming and sports betting, according to the company.

Malta-based Betway has over 60 branded agreements with athletes, leagues and teams around the world. In the United States, such deals include the Brooklyn Nets of the NBA, the Chicago Bulls, the Golden State Warriors and the Los Angeles Clippers.

It is not immediately clear when Super Group will debut on the NYSE. But the last month of 2021 could be busy for the closing of the SPAC deals on games. Codere Online, a Latin American video game and sportsbook company, will debut on Nasdaq tomorrow, and Tilman Fertitta’s Fertitta Entertainment is expected to complete a merger with FAST Acquisition (NYSE: FST) in the current quarter.

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