The tycoon Michael Spencer is preparing to purchase a minority stake in the company which currently owns one of the most prominent gambling businesses in the UK.
Reportedly, the billionaire financial services entrepreneur is approaching the closure of a deal under which he would acquire a portion into The Tote’s parent company Betfred. According to analysts, the purchase of the stake into the gambling business would make Mr Spencer part of the high-profile investors in the country’s gambling industry. The City magnate is aimed at buying a stake in the Tote’s owner through his TC ICAP, which is the largest inter-dealer broker on a global scale.
The deal, which has attracted other investors such as the Sir Winston Churchill’s granddaughter, Peter Davies from the Landsdowne Partners hedge fund, the Queen’s racehorse manager John Warren, is expected to be finalised by the end of the month. TC ICAP is set to take over a 10% stake in The Tote as part of its acquisition from Betfred.
Mr Spencer’s investment in The Tote’s parent company has reportedly cost him over £10 million and will come as part of a series of investment deals in technology-led operators in the last 12 months. The billionaire has participated in deals involving businesses such as Veridium and Elvie. The City tycoon has reportedly been seeing The Tote as a company which could be subject of future transformation through data and technology investments.
The Tote Could Be Transformed into Profitable Business, Owners Believe
The Tote was created as a state-backed activity that was supposed to serve as an alternative to illegal gambling back in 1928. The business was privatised in 2011, and the UK gambling operator Betfred bought it from the Government in a £265-million deal.
In 2018, Betfred sold an initial stake of The Tote to Alizeti Capital. Currently, there is a 75% stake which remains to be transferred from Betfred to Alizeti, with the completion of the deal expected to pave the way for a future relaunch of The Tote brand and help it find profitable partnerships with foreign pool-betting operators. The Tote’s minority sale to Mr Spencer has been confirmed by Alizeti Capital, with a spokesperson of the company specifying that the sale is expected to be completed soon as it already is in final stages.
To date, The Tote holds about 4% of the UK pool-betting sector. The operator, however, believes this stake could be significantly enlarged by making investments in new technology at a time when country’s high-street bookmakers are struggling to deal with the negative impact with the stricter regulatory and financial regime that is being imposed by the Government.
According to preliminary projections of Alizeti Capital, The Tote could be successfully transformed into a business generating EBITDA (earnings before interest, tax, depreciation and amortisation) of about £65 million by the end of the sixth year spent by the company under a new ownership structure.