GiG is nearing the finalization of its acquisition of an 80% stake in 888Africa, a move that signals a strategic shift for the company as it re-enters the B2C sector. Group CFO Phil Richards sees this deal as an opportunity to achieve immediate earnings while establishing a stronger presence in the fast-growing African markets.
Last month, GiG Software plc revealed its plans to acquire the 80% stake in 888Africa, a deal valued at up to €16.4 million ($19.1 million). To finance this acquisition, GiG aims to raise €2.5 million through a directed share issue and €6 million via convertible debt. This move marks a departure from the company's focus on a B2B-only model, which it adopted in 2023.
The acquisition is projected to close by the end of September, providing GiG with a “profitable, cash-generative B2C operator” along with access to some of the continent’s rapidly expanding regulated markets. According to Richards, this will also serve as a strategic bridge for GiG's core B2B operations.
He elaborated, “That dual value is really the point of the deal… Owning a leading local operator gives us direct, ground-level insight into regulatory developments, player behaviour, and payment infrastructure across several African markets, insights that are very difficult to build from the outside.”
Looking ahead, Richards expressed confidence that this localized knowledge could pave the way for GiG to engage with other operators interested in entering or expanding in Africa, similar to how its previous B2C experience in Europe enhanced its platform proposition there.
Assessing why GiG is re-entering the B2C market, Richards stated that several factors influenced this decision. First, he noted a shift in GiG's priorities away from a growth-at-all-costs mentality to a more profitable, cash-generating approach. Secondly, the opportunity to acquire 888Africa arose due to Evoke’s strategic changes, a chance he deemed rare for an asset of this quality. Lastly, Richards pointed out that the African market has matured, leading to real growth as opposed to merely potential.
Analyst Hjalmar Ahlberg from Redeye suggested the acquisition could also stem from challenges within GiG's B2B business. He noted that while initial projections appeared solid after the management transition, uncertainties in certain markets had impacted expectations, particularly surrounding a tier-one customer in Brazil that opted out of entering the market.
Despite the challenges facing B2B operations, Ahlberg views the 888Africa deal as both opportunistic and well-timed. Richards echoed this sentiment, describing the acquisition as a “targeted, opportunistic move” with strong economic benefits. Currently, Evoke's Bally's Intralot will retain a 20% share of 888Africa and remain active in its management.
Robinson, Managing Partner at Corfai Capital, emphasized the attractiveness of the €16.4 million valuation, citing that it reflects a deferred consideration that alleviates immediate cash flow pressures. He regarded this as a great opportunity for GiG due to its solid financial positioning within the African market.
Richards noted, however, that the acquisition is not a turnaround for 888Africa, which already has a strong foothold in key markets like Mozambique and is growing in Angola and Tanzania. The existing management team led by Christopher Coyne is essential in this established market.
Challenges remain, as Robinson pointed out, stating that while Africa offers a growing, profitable market, current competitors are well-established. The advantages lie in lower customer acquisition costs compared to saturated markets in regulated Europe.
Post-acquisition, GiG’s priority will be careful integration of 888Africa into its operating standards. Ahlberg suggested this could involve transitioning 888Africa onto GiG’s technology platform for better synergies. Richards emphasized a cautious integration strategy, prioritizing operational stability before seeking expansion into new markets.
Some analysts speculate whether GiG’s foray back into B2C could signal an increase in mergers and acquisitions. However, Richards clarified that the Africa deal is a unique case, and there are currently no plans for further B2C expansions as the company is focused on this specific opportunity.
Robinson expressed a broader perspective, predicting that this acquisition might indicate a new direction for GiG, highlighting that the company’s future may rely on consolidating its position in emergent markets rather than solely supplying technology. Ahlberg foresees the 888Africa acquisition as a significant component for GiG, with potential to balance operations between B2B and B2C depending on which area performs better over time.
