Bragg CEO Matevz Mazij has been encouraged by one of the company’s long-term investors – Raper Capital – to consider a full or partial sale to ‘maximise value for all shareholders’.
Writing a letter to Mazij and looking to instigate a buyout, Jeremy Raper, Founder & Head of Research at Raper Capital, suggested a sale of the company would ‘deliver a gargantuan premium’ to investors, stating that while Bragg’s revenue has quadrupled in the five years since transitioning from Oryx Gaming, the stock price has dropped.
In those five years, Bragg’s revenues have grown from €26m to €97m, with adjusted EBITDA rising significantly from €1.2m to €16.5m. However, throughout this period, the company’s stock price has dropped 25 per cent.
Launching a bid to execute a third-party sale of the business as “the only way to crystallise a proper return for the underlying business” that Bragg has created, Raper cites that entities managed by Raper Capital are “beneficially interested” in purchasing 375,000 shares.
Raper wrote: “A sale of the company should deliver a gargantuan premium, and certainty of value. As such, it is evidently clear that a third-party sale of the business is the only way to crystallise a proper return for the underlying business value that you, and legacy management, have created.
“I believe most other minority shareholders would not only support this initiative but indeed agree with my contention that such an initiative is the last, best course available to the company.”
In the letter, Raper suggested that Bragg’s listing on the NASDAQ in 2021 should have resolved a “persistent valuation discount” in stock price, however, this didn’t achieve “even the lower bounds of what most shareholders would consider fair value”.
Raper also referred to similar sales made by other igaming businesses in recent years, and how those decisions led to significant changes in shareholder value, using Aristocrat’s purchase of NeoGames, Evolution acquiring NoLimitCity and IGT’s purchase of iSoftBetas just a few examples.
The letter listed the many benefits of performing such a sale, suggesting that “culling management” could see a vast return on investment to shareholders, referring to Bragg paying Executives and Directors millions in CAD compensation in FY2022.
“In closing, I remain, as always, a committed, long-term shareholder of the Company,” Raper concluded.
“What you have built, first at Oryx and now at Bragg, constitutes a highly desirable, unique suite of igaming content and distribution assets that, for various reasons, has been ignored by the public markets for far, far too long – a stasis that, if uncorrected, may actually compromise the company’s continued bright growth prospects and risk much of the value you have created thus far.
“By calling for a sale of the company now, I only seek to preserve, and finally unlock, that latent value for the benefit of all stakeholders.”
