52 Entertainment sale enters final round in sponsor-heavy auction

Myriam Mariotte , Arezki Yaiche , Charlie Taylor-Kroll and Gustav Hoejmark-Jensen
19 May 2023

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The sale of HLD-backed French e-gaming platform 52 Entertainment has entered the final stage of bidding with mainly financial sponsors left in the running, two sources familiar with the matter said.

Binding bids for the Paris-headquartered company are expected to be collected by the end of the month at the earliest, a third source and a banker following the situation said.

Providence Equity and Bridgepoint were among the funds to submit a non-binding offer for the business, one of the sources and a banker following the situation said.

US-based TPG Capital and Fabrice Larue's FLCP also participated in the first round, an advisor tracking the deal said.

Providence Equity and FLCP were both reported to being circling the asset ahead of the first bids submittal by French press.

Private equity (PE) firms have a strong presence in the auction despite several trade buyers showing initial interest in the business, the sources said. At least one trade buyer is still pursuing the asset, one source said.

HLD, which is being advised by Rothschild & Co and Aream & Co, requested a minimum valuation of 15x EBITDA, which stood at EUR 40m for FY22, one of the sources said. This would represent an enterprise value of around EUR 600m.

A potential buyer would have to be willing to invest heavily to support the company's buy-and-build strategy, one source added. Large PEs have the benefit of having raised large amounts of dry powder in recent years, another source noted.

HLD supported 52 Entertainment's growth strategy since it entered the company's share capital in 2018, with a total of nine acquisitions completed since then, according to its website.

This month, the company acquired Loop Games, a France-based gaming studio positioned on casual games.

In 2022, it bought Bulgarian gaming development studio Casualino, following the acquisition of online sailing simulator Virtual Regatta and online card game platform Exoty in 2021.

In 2020, bridge game software publisher Great Game Products was bought by 52 Entertainment. It also took control of US-based BBO (Bridge Base Online) in 2018.

Virtual Regatta is the trophy asset of 52 Entertainment, one source familiar with the company said.

The game, which has been online for 10 years and has around 1.5m players each year, is profitable, which is not so common in the video game industry, the source said.

52 Entertainment is currently rethinking its business by incorporating Web3 and NFT solutions, the source added. The company registered EUR 60m turnover in 2021, as previously reported. It has more than 200 employees across 19 countries, according to its website.

The company entered this year the French Tech 120, a government support program launched in 2019 and dedicated to supporting France's most successful startups.

Rothschild, HLD, Providence, TPG Capital and FLCP declined to comment. Aream & Co, Bridgepoint, 52 Entertainment did not reply to requests for comment.