* Australia was selected for the sector based on support from public investors
* Could be the largest IPO in Australia since at least 2014
* Co. management will meet a select group of fund managers next week
By Paulina Duran
SYDNEY, Sept. 17 (Reuters) – Scientific Games Corp, a US-based gaming machine manufacturer, is attempting to list its mostly North American and European lottery unit in Australia on a $ 5 billion IPO, the country’s largest initial public offering in at least seven years ago, two sources told Reuters.
The Las Vegas-based company has made an initial public offering pitch to fund managers to value the lottery unit at more than $ 10 billion, the sources said on condition of anonymity as the deal is pending.
This would be the largest capital increase since Australia privatized its health insurer Medibank Private Ltd via a $ 4.9 billion IPO in 2014 https://www.reuters.com/article/australia-medibank-idUKL3N0TD02B20141123, according to Refinitiv- Data.
Scientific Games declined to comment.
The company announced in June that it would divest its lottery and other non-core sports betting businesses to pay off some of its $ 8.2 billion net debt.
It hired five investment banks, including the Macquarie Group, to look into a listing on the ASX Ltd stock exchange, people said.
Macquarie, who is also separately considering a possible commercial sale of the company, declined to comment.
According to the sources, the Sydney stock exchange was chosen because of the familiarity and support of Australian investors with the sector, which includes publicly listed competitors such as Tabcorp Holdings and Aristocrat Leisure.
Scientific Games’ lottery division, which sells wholesale lottery system services to customers in over 50 countries, is expected to see adjusted earnings before interest amortization and amortization increase 14% to $ 498 million in fiscal 2022, the company said this week.
In introductory meetings with fund managers in Australia, the company introduced the unit as a high-margin, long-term, “infrastructure-like” company that was resilient during the COVID-19 pandemic, the sources said.
That, and the high growth prospects, could warrant a valuation of up to 22x earnings, both sources said.
Management will hold meetings with a select group of fund managers in Australia next week to find a corner investor for the listing, one of the people with the added knowledge. (Reporting by Paulina Duran in Sydney; editing by Himani Sarkar)