GiG is nearing the final stages of acquiring an 80% stake in 888Africa, marking a pivotal moment for the company. This move takes GiG unexpectedly back into the B2C domain, a shift that CFO Phil Richards believes will yield immediate earnings and enhance the company's presence in Africa.
Last month, GiG Software plc announced its intention to purchase the 80% stake in Evoke’s 888Africa, with the transaction valued at up to €16.4 million (approximately $19.1 million).
To finance this acquisition, GiG plans to raise €2.5 million via a directed share issue and an additional €6 million through convertible debt. This deal signifies a return to B2C strategies for GiG, which had rebranded as a pure B2B platform in early 2023.
Richards indicated that the acquisition is projected to finalize around the end of September, establishing GiG as a “profitable, cash-generative B2C operator” in several of Africa’s rapidly growing regulated markets. He emphasized that it also serves as a “strategic bridgehead” for GiG’s core B2B operations.
“Acquiring a leading local operator gives us essential insights into regulatory changes, player behavior, and payment systems across various African markets,” Richards noted. “Such insights are challenging to obtain from a distance.
We anticipate our knowledge and local presence will facilitate discussions with other operators considering entry into or expansion in Africa, similar to how our prior B2C experience in Europe enhanced our platform capabilities there. This is not merely returning to B2C; it’s an acquisition aimed at bolstering our B2B prospects on the continent.”
The rationale behind GiG’s return to B2C is multifaceted. After exiting the sector in 2023 due to a strategic overhaul that separated its media and platform components—rebranding the former as Gentoo Media—questions arose surrounding the timing and motivation for this turnaround.
Richards advises against perceiving this as a complete reversion to B2C, affirming that GiG remains fundamentally a B2B platform and technology entity. He elaborated on the reasons for their choice to re-enter the B2C arena, highlighting three primary factors:
“Firstly, our own priorities have shifted. We are moving away from a growth-at-all-costs attitude towards a more disciplined approach stressing profitability and cash generation, and 888Africa contributes to both.
Secondly, this opportunity was limited in time. 888Africa became available due to Evoke's strategic shifts, and chances like this, with such a strong market position, are rare.
Lastly, the African market has matured to a point where the regulatory landscape, mobile advancements, and demographic trends are translating into sustainable growth, moving beyond just early-stage potential.”
Analyst Hjalmar Ahlberg from Redeye suggests that GiG’s decision to acquire 888Africa may also be influenced by challenges faced within its B2B segment. Ahlberg observed, “Initially, things looked promising after management changes and the spin-off. Their customer pipeline appeared solid, yet certain markets have become less predictable since then.
Some potential opportunities, like a major client in Brazil, fell through, leading to revised expectations.”
Despite Ahlberg's view on the B2B difficulties, he characterizes the 888Africa deal as strategically opportunistic. Richards described the acquisition as a “targeted, opportunistic move” with appealing economic factors.
In connection with GiG's ongoing acquisition of Evoke, Bally’s retains the remaining 20% of 888Africa and will remain involved in its management. Ahlberg described the valuation of €16.4 million as attractive, noting the deferred consideration of approximately €10.4 million that eases immediate cash requirements.
Ben Robinson, Managing Partner at Corfai Capital, shares an even more optimistic view on the price, noting the context in which GiG obtained the business. “Given the disclosed numbers, it seems economical. €16.4 million for an 80% stake suggests an enterprise value of €20.5 million with a projected $50 million in run-rate net gaming revenue (NGR), demonstrating strong annual growth and cash flow.”
While the acquisition of 888Africa came at a slight discount due to Evoke's situation, Richards maintains that Africa has been a long-standing element of GiG's strategic vision.
“Africa has long intrigued our CEO Richard Carter, whose insights allowed us to quickly act on the initial commercial terms by the end of August,” Richards shared.
Despite 888Africa not being a turnaround project, it boasts a seasoned management team led by Christopher Coyne, and a presence in Africa’s fast-expanding markets. Richards noted, “We are gaining established regional significance rather than starting from scratch. This blend of proven profitability, market share, and a steady management team significantly mitigates the risks typically involved when re-entering a consumer-oriented space.”
However, Robinson cautioned that opportunities in Africa do come with complications. “It’s a profitable and growing market, but acquiring a business from a distressed seller is rare in Europe’s regulated space, where scaling a B2C brand often requires significant investment against established competitors.”
“Africa offers less saturation, yet it is not without challenges. Competitors like Betway have firmly established themselves. What sets it apart is that you are competing in a developing market with lower acquisition costs while potentially benefiting from improved margins if you optimize payments and product offerings. The regulatory and currency risks are paramount, rather than mere competition.”
Following the acquisition’s completion, GiG’s priority will be smooth integration, aligning 888Africa’s financial reporting and operational processes with GiG's standards, according to Richards. Ahlberg anticipated that GiG will transition 888Africa onto its technology platform for long-term efficiencies.
Richards reiterated that the company will initially focus on proper integration and maintaining current market positions, delaying aggressive expansion efforts until they are assured of sound operational foundations.
Concerns regarding whether this acquisition signals a broader trend of B2C moves for GiG have emerged. However, Richards clarified, “We are not indicating plans to expand B2C into other geographies; our approach in Africa is a unique case—a high-growth, underdeveloped area where owning a local operator offers strategic benefits that may not apply elsewhere.”
Financially, Ahlberg pointed out that GiG has tapped out its available funds for this current transaction and is raising additional capital, which suggests other B2C acquisitions are not on the horizon soon.
Robinson, however, saw the potential for a broader pivot in GiG’s operations, suggesting this acquisition may signal the start of new initiatives. “This could be a significant shift, as GiG's long-term viability may depend on consolidating its presence in emerging markets instead of merely supplying technology.”
He emphasized that GiG is familiar with the B2C landscape, having previously operated brands like Rizk until their sale to Betsson in 2020, thus establishing a precedent for B2C integration.
In the end, Ahlberg perceives this acquisition as a potential doorway for GiG, hinting that the balance between B2B and B2C will likely depend on the performance of both sectors moving forward. “If the B2C segment accelerates, GiG might shift focus accordingly, but if B2B outpaces, then they’ll likely pursue that route instead. For now, it remains uncertain where the long-term trajectory may lead.”
