Cape Gaming Hub – Bortz Makes Next Move

Sun International considering their own moves

GMB Liquidity Corporation, headed by merchant banker and horse racing guru Greg Bortz, has secured a commanding holding of almost 50% in gaming counter Grand Parade Investments (GPI).

Marc Hasenfuss reports in Business Day that on Wednesday GPI confirmed GMB had acquired another 61.5-million shares, taking its stake to 48.9%. The stake will dilute to 46.34% if GPI’s treasury shares are put in the ownership equation.

Greg Bortz – big plans unfolding

Business Day reports that it understands that activist investor Value Capital Partners (VCP), previously an anchor shareholder in GPI, sold its remaining stake to GMB.

This development follows hard on the heels of gaming giant Sun International increasing its stake in GPI to more than 21% earlier this month. Interestingly, part of that stake was acquired from VCP.

It is unclear why VCP sold separate tranches to GMB and Sun. VCP is also a major shareholder in Sun — which has prompted some market comments around a “diplomatic exit” at GPI.

GPI has been Sun’s empowerment partner since the late nineties, even though the companies’ relationship was sometimes fraught. GPI still holds interests in prize Sun assets, most notably a 15% stake in the cash-spinning Grandwest casino in Cape Town and a 30% holding in highly profitable limited payout machine business SunSlots.

Sun has coveted GPI’s 30% stake in SunSlots, and the two parties were in discussions for a possible R504m buyout deal when the Covid-19 outbreak disrupted plans.

SunSlots was a top performer for Sun and GPI in the half-year to end-June with revenue of R717m transformed into healthy earnings before interest, tax, depreciation and amortisation (ebitda) of R178m.

GMB might not be inclined to sell GPI’s strong-performing gaming assets with Bortz already indicating a willingness to build a focused gaming hub. GPI also owns a 15% stake in the Golden Valley casino in Worcester.

Bortz was recently involved in recapitalising horse-racing business Kenilworth Racing in partnership with sports betting specialist Hollywood Bets.

Speculation has naturally now centred on the possibility of Kenilworth Racing and Hollywood Bets being reversed into GPI to create a diverse gaming investment company.

Sun’s role at GPI will be interesting to monitor. Sun has played its cards close to its chest, and it is uncertain whether it intends securing more GPI shares.

Market watchers have pointed out that Sun, if it lifts its stake in GPI to 25%, could prove obstructive, being able to block any special resolutions tabled at GPI.

Earlier this month GMB triggered a mandatory offer to GPI minority shareholders at 333c a share when it breached the 35% ownership threshold.


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