Flutter raises £812m in new share capital issue as group revenue jumps 10% in Q2

Flutter Entertainment has raised £812m in new capital by issuing 8,045,995 new shares to institutional investors as it seeks to reduce annual costs and increase its investment in the US.

International brokerage firms Goldman Sachs and J&E Davy worked as joint bookrunners in respect of the new shares.

The placement raised gross proceeds of £812,645,495, just under the £850m initial estimates revealed at the launch of the share issue late on Thursday evening. Shares were priced at 101.00 pence per share, with European investors paying €112.42 a share.

The shares represent approximately 5.5% of the Flutter’s issued share capital (excluding treasury shares) with the placing price being discounted to approximately 4.7% to the closing price on 28 May 2020.

Flutter has said the fund raising will facilitate a faster de-leveraging of the Group’s balance sheet, leading to immediate interest cost savings and reduced annual cash outflows.

“The Group believes that the current operating environment is likely to result in longer-term changes to the sector landscape which will lead to further opportunities,” Flutter said.

“The Placing will better position the Group to move quickly to capitalise on such opportunities should they arise, accelerating its four-pillar strategy and consolidating its market leadership positions,” Flutter confirmed in a statement late on Thursday evening.

In addition to preparing for potential M&A opportunities post Covid-19, Flutter has said it is looking to accelerate its US strategy in order to provide the “best possible platform” for future success post-merger.

As part of this, Flutter will look to secure additional market access deals in the individual US states as well investing further in customer acquisition.

In its latest Q2 trading update, the newly-merged international operator revealed its Q2 proforma group revenue had increased by 10% year-on-year.

This was buoyed by significant growth in its TSG International business, with Q2 revenues jumping 92% year-on-year as well as a 61% spike in revenue in its US facing business, which comprises Fox Bet, PokerStars and FanDuel Group.

Revenue from the firm’s Australian business also grew during the quarter, jumping by 56% year-on-year, thanks to the continuation of racing on a behind-closed-doors basis.

Flutter said its Australian business had seen an accelerated migration of retail customers to its online brand as a result of Covid-19 closures.

However, the Paddy Power online and retail business revenue dropped by 54% in Q2, coloured by a 41% fall in PPB online and a 100% revenue drop in PPB retail during the period. In addition, Sky Betting and Gaming revenue fell by 28% during the quarter.

Flutter Entertainment CEO Peter Jackson said the business has been navigating through “extraordinary change” due to the effect of Covid-19, but paid tribute to the hard work of the business during the period.

“As with many other sectors, in betting and gaming there have been stark impacts as much of the world has gone into lockdown, with some parts of the sector struggling and others thriving as consumers change their purchasing habits,” Jackson said.

“Today we are starting to look more directly to the future in terms of planning for growth whilst we continue to benefit from our product and geographical diversification as the unpredictable situation unfolds,” Jackson added.