Shares of Spanish casino group CIRSA ended flat on their stock market debut, despite initial gains. This marked a rare success in a turbulent European IPO market, as the Blackstone-owned firm pushed ahead with its listing.
The company’s shares opened 6.7% higher at €16 ($18.70) on Wednesday, briefly valuing CIRSA at €2.7 billion ($3.16 billion), before retreating to close at €15 ($17.53), the same as its IPO price. CIRSA raised €400 million ($467 million) through the sale of 26 million shares, representing a free float of roughly 18%. If the overallotment option is fully exercised, the offering could increase to €521 million. The listing marks Spain’s second-largest IPO this year, despite market challenges.
A Market Testing the Waters
Despite the broader geopolitical and economic turbulence affecting the IPO market, CIRSA’s offering came as a breath of fresh air. The European IPO landscape has been anything but straightforward. Geopolitical uncertainty, particularly in the Middle East, and fears over potential U.S. trade tariffs have caused many companies to delay their listings or reassess their timing.
But CIRSA bucked that trend. The firm’s offering was reportedly oversubscribed, a rare feat these days. Investors quickly snapped up the available shares, reflecting confidence in the casino operator’s future growth prospects. A source close to the offering noted that “the books were covered very quickly.”
This is a critical moment for CIRSA, which is looking to use the proceeds from its IPO to reduce its hefty €2.37 billion net debt. The company has plans for continued expansion, and going public will allow it to grow faster. With its IPO, CIRSA aims to unlock opportunities to accelerate its acquisition strategy, which has already been aggressive in recent years.
A Rapid Expansion Strategy
Founded in 1985, CIRSA operates over 450 casinos across 11 countries, cementing its presence as one of Spain’s largest gaming operators. CIRSA has been a model of expansion, especially since its acquisition by Blackstone in 2018. The private equity firm bought the company at an enterprise value of €2.1 billion, and since then, CIRSA has completed over 130 acquisitions worth €1.2 billion.
The company’s aggressive expansion strategy has focused on strengthening its position in Spain and Latin America. Notably, it has recently taken stakes in Peru’s Apuesta Total and Casino Portugal, positioning itself to tap into emerging markets.
CIRSA’s 2024 financial results show an 8% rise in net revenue to €2.2 billion and an 11% increase in EBITDA to €699 million. These numbers suggest that the company is on the right track as it continues to diversify and strengthen its portfolio.
Gambling Industry Outperforming
The gambling sector, despite challenges in the broader market, has been one of Europe’s stronger performers. Shares in Italian betting operator Lottomatica, floated by Apollo in 2023, have surged more than 80% this year. Similarly, British casino operator Rank Group has seen its stock price rise over 65% year-to-date.
In this context, CIRSA’s IPO comes at a time when the gaming sector continues to thrive, thanks to strong investor interest in betting and casino operations. Investors appear willing to back businesses in this space, which has been buoyed by growing consumer demand for both online and physical gaming options.
CIRSA’s Plans Moving Forward
Now that CIRSA has successfully debuted on the market, it’s set to continue its aggressive acquisition path. The company has identified up to 100 potential acquisition targets, primarily in Spain and Latin America, and plans to spend between €400 million and €500 million on deals over the next three years. This strategic focus on expanding its footprint in key markets will be crucial as CIRSA works to reduce its debt and strengthen its market share.
CIRSA’s executive chairman, Joaquim Agut, expressed that the IPO would allow the company to grow faster and enhance its financial flexibility. With public status now secured, CIRSA can begin to tap into new capital sources, a step that will help it compete in an increasingly dynamic gaming industry.
At the same time, Blackstone’s investment in CIRSA has been notably lucrative. The private equity firm originally invested in the company backed by €1.5 billion in debt, followed by another €400 million to fund a dividend. According to sources familiar with the matter, CIRSA’s IPO valuation now exceeds 2.5 times the equity Blackstone initially invested.
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