Target Information

Gamenet has successfully transformed and diversified its operations within the highly regulated gaming market in Italy since 2014. Under the leadership of a new CEO with considerable experience in the sector, Gamenet adopted a growth strategy focused on expanding its portfolio of directly-owned gaming halls, including medium and large formats. The company's entry into the direct management of amusement with prizes (AWP) and an increased presence in the betting sector have marked significant milestones, particularly through strategic acquisitions of Intralot and Goldbet's Italian operations.

These acquisitions were facilitated by Trilantic Europe, which provided essential M&A expertise and engaged in negotiations with the sellers to ensure successful transactions. Since the entry of Trilantic Europe, Gamenet's EBITDA has surged from €14 million in 2010 to €158 million as of June 2019, reflecting a remarkable compound annual growth rate (CAGR) of 33%. This transformation has not only emphasized organic growth but also leveraged M&A opportunities, expanding the workforce from 73 to 726 employees within a span of nine years, thus solidifying Gamenet's position as the third-largest gaming operator in Italy.

Industry Overview in Italy

The Italian gaming industry has undergone significant changes over the past decade, characterized by stringent regulation and a complex legal framework designed to mitigate illegal gambling practices and promote transparency. This sector includes a diverse range of gaming products, including AWP, video lottery terminals (VLTs), sports betting, and online gaming, making Italy one of the largest markets in Europe for gambling activities.

In recent years, the market has been increasingly driven by digitalization, as operators adapt to changing consumer behaviors and technological advancements. The rise of online gambling platforms and mobile betting applications has transformed the competitive landscape, encouraging traditional operators to innovate their offerings and bolster their digital presence.

Despite regulatory challenges, there has been robust demand for gaming services, providing opportunities for growth, particularly in the licensing and management segments. Operators that comply with the evolving regulations stand to benefit from increased market share and higher consumer trust. As consumer preferences continue to shift, the Italian gaming sector is poised for further expansion with substantial investment potential.

Rationale Behind the Deal

The rationale for the acquisition by Apollo Global Management stems from Gamenet's significant growth trajectory and its strategic initiatives in the gaming market. The transition from a pure AWP operator to a major player in the Italian gaming landscape presents promising revenue-generating opportunities, with a balanced mix of product offerings that appeal to a broad customer base.

The successful restructuring and strong financial performance under Trilantic Europe's stewardship made Gamenet an attractive investment for Apollo, who aims to leverage its operational strengths and facilitate further growth in both the domestic and international markets.

Investor Information

Apollo Global Management is a prominent global alternative investment manager known for its extensive portfolio across various sectors, including financial Services, real estate, and infrastructure. With a focus on value creation, Apollo aims to apply its resources and expertise to drive Gamenet's next phase of growth.

The investment aligns with Apollo's strategy of acquiring quality assets that demonstrate significant potential for operational improvement and market expansion. Their extensive experience in managing diversified portfolios in regulated industries uniquely positions Apollo to enhance Gamenet's operational efficiencies and capitalize on emerging market trends.

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Based on an expert analysis, the acquisition of Gamenet by Apollo Global Management appears to be a strong investment opportunity. The substantial growth in Gamenet's EBITDA and strategic positioning in the Italian gaming industry indicate a robust operational framework that is likely to yield continued profitability and market expansion.

The successful transition into a multi-faceted gaming operator not only diversifies revenue streams but also mitigates risks associated with reliance on a singular product offering. Furthermore, Apollo's reputation and expertise in scaling operations provide confidence that Gamenet can achieve sustained growth under their stewardship.

However, potential risks associated with regulatory changes in the Italian gaming market and ongoing competition from both traditional operators and emerging digital platforms must be monitored closely. Nevertheless, Gamenet's established market presence and proactive management strategies suggest that it remains well-positioned to navigate these challenges effectively.

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