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NEWS 31 July 2017
Blackstone's spree on gaming-focused businesses
By Caroline Watson
Earlier this week, investment firm, Blackstone announced the acquisition of Clarion Events from private equity funds managed by Providence Equity Partners in a huge £600m deal.

Blackstone was not the only company looking to purchase the events company, with both Cinven and a Chinese investment corporation also declaring an interest.

Clarion has a diverse portfolio of events and brands across a range of vertical markets, including Retail & Home, Gaming, Defence and Security, and Technology and Energy. If the £600m figure is accurate, this means the company has been re-valued at three-times the figure Providence Equity paid back in 2015.

Clarion Events CEO Russell Wilcox announced: “Blackstone are one of the largest and most respected private equity investment houses in the world. From the start of this process, it has been clear that they share our expansive vision for how we can grow and develop the company.”

Lionel Assant, Head of European private equity at Blackstone added: “Clarion’s leading position in its markets combined with its strong management team will enable the company to continue growing both organically and through M&A.

“Blackstone has a significant track record of investing in media businesses as well as buy and build platforms. We look forward to working together with management to capitalise on its success.”

Although this substantial deal was only finalised last week, Blackstone didn’t stop there; a few days prior the company put in another bid for British payments processor Paysafe

Financial companies like Blackstone have been targeting online payment processors as the race heats up to grab a piece of the extremely lucrative e-commerce industry. However this time Blackstone partnered up with CVC Capital partners to put in a £2.9bn preliminary offer for the payments giant.

Blackstone and CVC made their initial approach back in May and they now have until 18 August to make their final offer or to walk away.

Speaking to Gambling Insider about the recent spending spree, Lorien Pilling, Director at Global Betting and Gaming Consultants, commented: “Private equity firms are in the business of getting a return on their investments, so the rationale for these acquisitions [Paysafe is a bid at the time of writing] is that the firm sees an investment case for growth and future profits.

“In the gambling sector we think of Clarion as a gambling expo/conference organiser but its scope extends much further, including sectors like life sciences, defence and technology (including payment conferences). Blackstone has presumably taken the view that these sectors are growing and, therefore, so will demand for related conferences and events.

“The Paysafe bid with CVC does seem to be more of a gambling-linked investment. Paysafe has both payment brands and also the affiliate marketing business Income Access. CVC already has a number of betting and gaming investments like Sisal, Sky Bet and Tipico. Also, CVC did previously hold a stake in Skrill (2014), which is now a Paysafe business, so it knows the sector.

“But there might also be a bit of “fear of missing out” syndrome about the bid. There have been a number of acquisitions and private equity investment in payment companies recently, so they might have wanted a (large) piece of the action.”

Although private equity firms are currently under a great deal of pressure from investors to start spending recently-raised funds in a buoyant fundraising market, analysts have said this could have adverse effects. These monumental spending sprees are somewhat reminiscent of a lead-up to the financial crisis that rocked the country nearly a decade ago.
RELATED TAGS: Industry | Mergers & Acquisitions | Financial | Feature
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