RECM & Calibre (RAC), the investment house headed by asset managers Piet Viljoen and Jan van Niekerk, has increased its bet on the buoyant alternative gaming sector.
At an annual general meeting on Wednesday, RAC disclosed a further investment of 7.8% in Goldrush — a specialist in electronic bingo terminals (EBT) and limited payout machines (LPMs) — for R132.6m.
With Goldrush also recently buying back some of its own shares, RAC’s stake in the cash spinning gaming business has increased to 58.8% from 50% at the March financial year-end.
The EBT and LPM sector has outperformed the more mature casino sector of late. Both JSE-listed gaming giants Tsogo Sun and Sun International have shown sprightly growth at top and bottom line in their respective alternative gaming hubs.
RAC’s Goldrush investment now comprises around 67% of its assets.
In the year to end-March Goldrush generated revenue of more than R1.3bn and earnings before interest, tax, depreciation, amortisation and rentals (ebitdar) of almost R350m.
Van Niekerk said Goldrush continued to trade well and had opened a further bingo property in Margate in KwaZulu-Natal. This brought the number of operational bingo properties to 29 out of the total number of licences of 35 held. He said all the company’s existing bingo operations experienced continued growth since financial year-end.
Tthe LPM business was rolling out machines at a steady pace, with the number of live LPMs now exceeding 2,000. He pointed out that this number was still less than half the company’s total available capacity of 4,200 LPMs.
RAC was questioned at the annual general meeting about the potential for separately listing Goldrush.
Van Niekerk said it made sense to list Goldrush “at some stage”, with Viljoen cautioning that it was not a good time to list a company on the JSE.
RAC shareholders were also keen to gauge whether Goldrush was reaching maturity in its growth profile. CEO Mergan Naidoo and Van Niekerk intimated there could still be aggressive expansion over the short-term with years of organic growth potential in ensuing years.
RAC disclosed another post-balance sheet transaction at the annual general meeting, reporting that it would sell SA College of Home Studies, the technical and vocational education and training college, to FutureLearn.
FutureLearn is controlled by Stellenbosch-based investment group PSG, which also holds controlling stakes in JSE-listed private education ventures Curro and Stadio.
No deal value was disclosed, but RAC said the business was sold for a valuation similar to that reflected at financial year-end. RAC’s annual report showed a R41.9m value for its 97% stake in SA College.
In terms of a balance sheet update, RAC disclosed cash holdings of R136m. But it has issued preference shares to Absa with a face value of R350m and accrued dividends due of R14.4m. That means the investment group is in a net debt position at R228.4m.