In 2021, you featured in Gambling Insider’s CEO Special. How do you reflect on life at FDJ since then?
Well, it’s been a very exciting period. I think it was in 2021, so we were just coming out of the Covid-19 crisis. I think we were very much in the transition to a normal period. And I think the first element of satisfaction after this, or even during this period, is that we were able to come through this period with strength in terms of digital penetration, increasing growth and performance.
So, I think the first thing I could say about those years, based on this, is the solid performance that we’re able to draw from our current activities. We have engaged in a new phase of the development company because, of course, we’re going to talk about Kindred further on. But before Kindred, let’s talk about how we diversified and developed the company. First, we bought the Irish National Lottery operator, and we also bought some assets to develop our payment and service activities. So, we’ve been developing the company with new assets in new businesses. It has been an exciting journey. And, of course, Kindred is a continuation of this journey, but on another scale.
Kindred is the big story, and I would be remiss if I didn’t ask you about it. But before we move on to that question it’s probably worth pointing out that you’ve been CEO for several years now. That is quite an achievement given the average lifespan of a CEO can greatly vary.
It’s a testament to the consistency of the company. But it also means my Board and shareholders are happy with performance. As a matter of fact, I was appointed first as the CEO in 2014, to prepare for the privatisation and IPO of the company. By November 2019, the IPO of the company and privatisation was a big success.
Now, on the basis of what we’ve been building, my continuation will be proposed during the next General Assembly of FDJ on April 25. Part of this will be the proposal to renew my mandate for four more years, and I, of course, hope this will be accepted. So, it’s a part of the success of the company to have gone through this strategy with the continued team. Not only with me, of course, but with the whole team.
At FDJ, we have invested in strong brands, and we believe that if we want to sustain this activity, on a profitable and sustainable basis, we need to be at a higher level
You’ve already mentioned your acquisitions of Premier Lotteries Ireland, while FDJ has also bought horseracing operator ZEturf. With Kindred, there are obviously plenty of questions I can ask! To start off with, what were the opportunities you identified that assured you this was the right choice?
I think it was based on the strategy that we explained to our capital market in November 2022. We have been very clear about our willingness to look for international assets to diversify the company further. So we have been looking at different assets and opportunities. Kindred is, of course, a company we have known for quite a while. Not only were they already present in the French market, there then came the opportunity with the fact that the Board of Kindred launched a strategic review in April 2023. So, it gave us the opportunity to have a deeper dive into the company, at its business and at its technology. Of course, we had an intense conversation with the management and the Board of the company, too.
We took our time to make our judgement. This asset has a strong character that we are looking for in terms of international presence. It also has some key markets in terms of brands, in terms of technology, and, again, in terms of its teams; because this is all really part of what we buy. Of course, we were also able to form a price about the value of the company that was compatible. The Board was willing to accept the fact that we were able to make an offer that was recommended by them, with commitments from five of the main shareholders also making this deal possible. So, it’s an alignment of the planets. Now we are entering the offer period. So, we are not the owner of the company at this point. In fact, right now, we are even competitors in some markets, including the French market, so we have to abide by competitive rules to proceed. But we are very confident in our capacity to complete this deal.
How will the merged organisations operate? It’s obviously at an early stage, but will Kindred have autonomy or are there plans to change things up?
You’re a little bit ahead, there! (Laughs). But I strongly believe that if we do this deal, we will create a new group, a very different group with which we have around 20% of activity outside France and around 20% of its activity will be in the online gaming business (based on current figures), so it’s a very different group. We intend to use Kindred as a strong asset that will become the core of our activities in online gaming both in France and outside of France. So I think the question is not whether it will stay independent or not, the question is what kind of new group will we form together?
A couple of follow-up questions on that. Obviously, there are other things than Kindred we will discuss later... But you talked about planets aligning. Was it very beneficial that Kindred had already decided to leave the US market?
Regarding your point about the US market, yes, it’s true it was among the elements that made the planets align. I think the fact that Kindred announced its withdrawal from the US market did contribute to the alignment and to our capacity to make the deal. I think it was quite a rational conclusion. At this point, there was no real visible perspective of the benefits of their investment in the US. If we were to buy Kindred without the decision, we would have closed the US business ourselves probably. So, the fact they announced it and are in the process of implementing this decision is a positive element into the picture.
The Board of Kindred launched a strategic review in April 2023. So, it gave us the opportunity to have a deeper dive into the company, at its business and at its technology
Where do you think the new group can rank? Obviously, I understand you can’t be too speculative, but looking at massive groups like Entain and Flutter, these are some of the biggest in the industry. What are you looking to produce on a global basis?
We want to address the European market because this is at least, first, where we believe we have a natural positioning, natural complementarity, better knowledge, and capacity to build a very strong European leader. So, in that sense, it’s not obvious to compare us to a group that has a strong US position as some of the ones you mentioned. We want to be among the leading groups in Europe.
I recently spoke with Isabelle Falque-Pierrotin, the Chairwoman of the Autorité Nationale des Jeux (ANJ), and I find how operators work with the French regulator fascinating. I explained to her that, from a UK perspective, the fact that operators have to submit an advertising strategy to the regulator in advance is a completely alien concept. From your side, what’s it like working with the ANJ from the operator side?
Well, you know that FDJ is the biggest company in the French market. In addition to that, of course, we are a company that has exclusive rights to the lottery and also the point-of-sale sports betting. So, by definition, we have a strong interaction with the regulator. This is part of our job, and this is part of our business. We have a strong interaction with this regulator that has been created in the context of our privatisation.
So, it’s something that FDJ has seen as it’s evolved as a listed company. We are definitely the company that I think has the most numerous authorisations to get from the regulator. I’m not going to tell you I like it, but I’m going to tell you that it’s a mirror of the fact of our position in the market, which is a strong position.
I believe that if you want to be successful in this activity, you have to be able to manage the relationship and use the regulation as something positive for your business. When you talk about responsible gaming, we believe hugely in responsibility in our business, because if you’re not able to manage this with the vision within your business, you’re not going to be successful in the long term. So, yes, there’s a lot of tight regulation, and again, as any operator, we submit our ad campaign to the ANJ. I’m not going to tell you whether it’s good or bad, it’s just a fact. When you look at our results, you’ll see that we’re able to manage this and be a very successful operator. So that’s part of our business.
That is certainly a respectable position. Over the next few questions, I wanted to focus on sports betting in particular. If you take the potential synergies with Kindred aside, do you feel FDJ performs well in sports betting, and where could you improve?
Firstly, we’ve had very good results in our sports activity this year. And I think it shows in our results. We were able to strike a very good level of growth, in fact, over 10% growth in GGR. But also, we are very proud of the fact that, as of today, in the online sports and gaming French market, we are actually able to increase our market share. We believe it’s linked to the fact that over the last few years, we’ve definitely invested in this activity. We invested with the vision that, to have competitive sports betting activity, we had to become a global online operator in the French market. This is what we are aiming to do, not only by creating a popular offering, but by being open to competition for the online market in France. So, we invested in the quality of our customer service, the quality of the app, the quality of our offers.
However, we are the number four in the French market today. So, with all of this effort and performance, I think that there comes a question of what Kindred is bringing to us. If you look only at the French market, definitely Kindred is an opportunity to grow our market share. It’s also an opportunity to improve our brand, our customer relationships and to improve our technology. So, I think this alone isn’t a sufficient reason for buying Kindred, but it’s part of the positive impact we expect. I think more generally speaking, we believe that to be a competitive operator in the online market today does require sufficient scale to invest in the long term, to invest in brand and technology and in consumer relations. When you look at how the market has been structured in recent years, you can see the emergence of big players that have invested in proprietary platforms and technology.
At FDJ, we have invested in strong brands, and we believe that if we want to sustain this activity, on a profitable and sustainable basis, we need to be at a higher level. So, I think Kindred is really the conclusion of this vision. We believe in the vision we see from the current market today and we hope to be able to implement it with this acquisition. But it will be in 2025, because we’re going to need most of the year to complete the acquisition.
It's an alignment of the planets. Now we are entering the offer period. So we are not the owner of the company at this point. In fact, right now, we are even competitors in some markets, including the French market, so we have to abide by competitive rules to proceed
Sure. I wanted to ask you about FDJ’s share price. It peaked in 2021 and has fallen since. But this year you’ve seen a healthy increase. As the CEO of the company, how do you reflect on that? Obviously, it’s not the only metric to judge your business by, but it’s an important one.
Well, I think you described it very well. The evolution of the share price in 2021 – clearly, we benefited from the fact we were able to manage the Covid-19 crisis and come out stronger. So, I think the share price did reflect that there was clearly a change of vision in terms of risk, with the announcement of the inquiry of the European Commission on potential state aid. That was in July 2021. This is clearly where things change.
After that, our shareholders have definitely been quite happy with the devolution and the business performance of the company. But I have been waiting for the conclusion of this inquiry, because they don’t know how to price the risk, which is absolutely fair – even though we are very confident about the fact that this should not be a big risk for the company. But that’s what has been happening since. Now I think what is very interesting, and it’s not always the case when you announce a big deal: when we announced the Kindred offer at the end of January 2024, there was a positive reaction from the shareholders. So, they were interested.
And I am convinced by the fact that, if this deal goes ahead and is executed well, in terms of using it to develop our strategy and synergies, it is a very attractive deal for our shareholders, which has the potential for more value creation. This is what we explained during the announcement in terms of the potential increase in our revenue per share for the shareholder. And, again, I think the reaction showed they were convinced by this potential. So, we now hope to be able to realise this potential and to gain more value from it in the meantime, for our shareholders and for us.
Brilliant. A final question from me – you already mentioned a big job for this year will be the offer for Kindred. But in terms of the rest of 2024, what kind of goals remain for FDJ? What are you aiming for the rest of the year?
Firstly, we want to continue to meet the commitments we have taken in terms of financial guidance within our current plan. So, we aim to show that, during the offer period, we can continue to manage the company, and gain growth and increase profitability to reach our target for 2025. And, of course, with Kindred, we will be in a position to set a new perspective for the medium term. So, one is to fulfil our guidance for 2024. Second, in the meantime, is to complete the Kindred transaction – which means to convince Kindred shareholders our offer is a good offer. It seems that the indications are going very well in this direction, so we’re quite confident. But of course, we need to complete this.
We also need to get agreement from the anti-trust authority in France, as it’s an important topic. As we mentioned, the Kindred deal will also give us more opportunities to grow our business in France. So it’s important to fulfil this goal too; we are preparing the rules we have to abide by. But we are preparing for this new group that we want to create with Kindred and the objective we will set ourselves for the year to come. So, it’s going to be a busy year. And on top of this, of course, we have the Olympics and Paralympics in Paris. Of course, London is the major benchmark we want to beat. You always want to beat your competitors. So, we hope to succeed in the Olympics and FDJ has always been very active in sports. It’s very kind of you to compliment London.
It’s always nice for an Englishman to hear that we serve as inspiration for France...
I only talked about the Olympics! (Laughs)
Yeah, I mean, given what happened at the World Cup… Just down the road in Germany, we’ve got the Euros coming up this summer as well.
Absolutely. It’s a big sporting year.
