Two of the four funders listed in the original document have now been dropped, leaving two Hong Kong-based firms as Baazov’s source of capital for the CA$24 per share bid for Amaya.
The amended SEC filing is here.
In a truly bizarre turn of events, one of the four firms listed in Baazov’s November 14 filing went public on Wednesday, saying that it had no knowledge of the deal.
KBC Aldini Capital Limited CEO, Kalani Lal, told the Globe and Mail (paywall) newspaper that he was unaware that his company had any involvement in the deal filed with the SEC by David Baazov.
Amaya quickly put out its own statement saying that the board was aware of the media reports, but saying nothing more.
Baazov’s amended SEC filing lists his two funders as:
The filing declares that they have entered into “binding equity commitment letters,” with funds in the amount of $3.45 billion.
That is $200 million less than the amount declared in the first filing.
Both are registered with the Hong Kong Securities and Futures Commission but neither is primarily focused on private equity business. Each has an asset management company which provides clients with a wide range of investment options.
The two firms no longer listed in the SEC filing are:
The amended filing states that:
“… the equity commitment letter purported to be delivered to the Acquiror on behalf of KBC was delivered without KBC’s knowledge or consent and that KBC has not committed to provide financing for the proposed acquisition of Amaya. KBC is not one of the Equity Financing Sources of the Proposed Transaction.”
No explanation is given for why Ferdyne is no longer part of the deal.
Baazov has filed a not guilty plea and the case continues.
Putting together external funding for a multi-billion dollar bid, especially one for a gambling company, is difficult enough without the reputational risk that the AMF investigation has introduced.
And the confusion surrounding Baazov’s recent SEC filings will do nothing to endear him to mainstream private equity funders.
Amaya has not yet responded to the new SEC filing, but it will make certain that it has conducted a little more due diligence than is normal to be sure that the bid is real.
Whether the board will feel capable of recommending the bid to its shareholders, given the clouds that are hanging over Baazov, is another matter.
A wave of Chinese investment has entered the non-gambling gaming industry over the last decade.
Chinese company Tencent is the world’s leading investor in esports, with a 100 percent stake in Riot Games—owner of League of Legends—and 12.5 percent of Blizzard Activision—owner of Call of Duty, Call of Duty Online, Starcraft II, Heroes of the Storm, Hearthstone, and Overwatch.
It also owns equity in many other game developer and esports companies, and has a market value of around $260 billion. But it has not made a move into real money gambling.
Alibaba—market cap around $232 billion–is another giant Chinese company with gaming interests. It has made substantial investments in esports after launching the Alisports division (paywall) in September 2015.
Alibaba has invested in the Match Poker game which was developed by the International Federation of Poker (IFP). It is also listed as a source of funding for the sale of Caesars’ Playtika business to the Giant Interactive Group (GIG).
Playtika was the main business of Caesars Interactive Entertainment (CIE). CIE’s other business lines are the WSOP brand and online poker operations in New Jersey and Nevada.
Notably these were not included in the sale to GIG.
A multi-billion dollar investment in an online gambling company such as Amaya would mark a strategic initiative for Chinese investors.
It could produce a ripple effect across the industry if investors believe that Chinese money is heading for online gambling companies.