Who is the significant player??????

Purple Capital to acquire significant player in the sports betting industry: Charles Savage - MD, Global Trader

ALEC HOGG: Today there was the likely transaction by Purple Capital moving more aggressively into the sports betting market. In the studio with us is Charles Savage, managing director of global trader, which is I suppose the core part of Purple Capital. Charles, it's a R60m potential transaction. You went into a company called Powerbet gaming a little while ago. Is it really bulking up in that area?

CHARLES SAVAGE: Sure. We bought a company called Powerbet, which operates a … called Voltbet, which is predominantly an online – in fact only an online – sports betting business. This acquisition gives us much deeper physical distribution, it complements our client base, it's largely a horse-racing community in terms of betting preference. It's also a low-LSM target audience, and they have deep distribution in KZN and Western Cape, and most of our folk are sitting in Gauteng. So a very complementary deal with a skills set that we didn’t have in physical shop management and distribution to low LSMs, where our core competency has very much been in online sports betting.

ALEC HOGG: R60m is s lot of money, though.

CHARLES SAVAGE: It is. It's all relative to what the earnings are, and we'll see that come out as we give more disclosure in the coming months.

ALEC HOGG: What's so exciting about the sports betting area?

CHARLES SAVAGE: Alec, we've no time to describe it all, but if we look at the gaming industry at large, South Africa has some great successes in other sectors of the gaming, so land-based casinos have obviously done very well. In the UK 50% of gaming revenue comes from sports betting. In South Africa it's only 10%, and that’s largely based on the fact that sports betting is not well understood, poorly marketed and has lacked investment and it hasn’t been corporatised to the extent that people trust it significantly. We are setting about changing that. We think that sports betting over the next five years will close the gap on where it is from 10% to 50%, and we are doing that – we've got a two-pronged approach in our strategy. One will be a consolidation of the industry, because it's very fragmented, so we are going to be buying other players in the industry. And the other one is to use aggressive marketing and to be far more transparent and open about sports betting, because it's got a bad rap and it doesn’t deserve it.

ALEC HOGG: You obviously liked what you found at Voltbet.

CHARLES SAVAGE: I love it. I've actually been in some way involved in sports betting for about 15 years, and I've always tried to find an acquisition, entry for Global Trader, but it's very difficult, given the nature of the sort of bookmakers that were operating. Voltbet was a clean business. It's only been operating for six weeks, and so there was very little due diligence to be done. It was more about buying a form of strategy than buying a bespoke business. So it was an easy acquisition to do, it came with a great team and a deep investment in technology.

ALEC HOGG: If we assess Purple Capital going forward, because obviously you’ve got Global Trader, which is the major part of the business, are there international companies that you can run the line through – perhaps Ladbrokes, William Hill -- and then reflect that onto where you might be going?

CHARLES SAVAGE: Ja, in the UK you’ve got – you mentioned the two big players. On the other side of the fence, the DowG[?] index. We also have an interest in sports betting there. It's more in comparison to the financial market side, and I think that’s because they operate in the markets where sports betting is very competitive and so the opportunity to enter those markets has been difficult to do.
But if we look locally, Phumelela, which is the only other listed access to sports betting in South Africa, has got a very strong bias towards horse-racing and managing and doing a horse-racing operator, but they also delve into our world. They have a joint venture with a small group out of Ireland, which I think failed. But the synergies between financial services and sports betting are very real. ...

So they paid R60m for voltbet? Thought they were just a new company?

No Bob would guess its a BIG player.