First gaming company on the BSE to debut with 200m+ IPO of in mid-February

Telematic Interactive Bulgaria EAD

Telematic Interactive Bulgaria EAD

Telematic Interactive Bulgaria EAD, a casino platform operator and sports betting under the brand of PalmsBet (top 3 of online gambling operators in Bulgaria), plans an IPO on February 14th on the Bulgarian Stock Exchange. 400,000 new shares will be offered until February 18th via the method of book building at a price range from BGN 50 to BGN 75 per share, implying a potential company’s market capitalization between BGN 200 and 300 million.

In the presence of investor interest, the majority shareholder Eldorado Corporations AD will additionally offer for sale up to 400,000 existing shares. Upon successful placement of all offered shares (two rounds total), 18.2% of the capital will be free float. The timeframe for submitting bids is February 14-18.

The raised funds will be utilized for planned expansion into new markets – Peru and Ukraine. The South American country has become a hot spot for foreign operators and has an open market for everyone, which is estimated at USD 738m according to Casino Online Peru.

Telematic financials

The company has increased its revenues almost 38 times in the last three years (CAGR of 231%) thanks to the rapidly growing customer base (37x growth in 3 years to 19.3k users in 2020). Telematic’s forecasts 2021 is revenue to reach nearly BGN 80 million, and net profits to exceed BGN 20 million (net margin of 27%).

Taking into account the IPO price range, the latter would imply a forward P/E at levels between 10x-15x. For comparison, our peer analysis of international comparable gambling operators shows a median of above 20x fP/E. Furthermore, the sample displays less than half the profitability of TIB with a median net income margin of 12%.

To put things into a further perspective, one of the most recognized gambling brands in Peru – Royal Panda Casino, was fully acquired by the Swedish casino operator LeoVegas at 8x EV / EBITDA in 2017. Currently, Telematic will be offered at EV / EBITDA levels between 8x-12x. Please note that the acquisition took place 5 years ago, when market valuations were significantly lower and Royal Panda’s EBITDA margin was at 15% (vs Telematic’s 30% EBITDA margin).

In addition, the company has adopted a dividend policy to distribute a minimum of 40% of the earnings – which translates into annual dividend yield between 2.8% and 4.2% (depending on the IPO price).