MultiChoice suffered losses after investing almost R6 billion in Blue Lake Ventures, recently renamed KingMakers use to trade as BetKing
Headquartered in Nigeria, KingMakers specializes in sports betting and entertainment, with plans to expand across Africa.
In 2020, the company acquired a 20% stake in BetKing with an upfront investment of US$81 million (R1.4 billion) in cash and a potential profit target of US$31 million (R500 million).
MultiChoice announced that a $31 million payout had commenced, bringing the total value of his 20% stake to $112 million (R1.9 billion).
In 2021, MultiChoice acquired a further 29% for $281.5 million, increasing its stake in KingMakers to 49%.
At US$393.5 Million, MultiChoice’s has 49% stake, equivalent to approximately R5.9 billion.
KingMakers has fully diluted rights voting the 49.23% according to MultiChoice, but the economic interest equates to his 51.23%.
MultiChoice said he owns 49.23% of the company’s shares. However, due to IFRS requirements, 51.23% assumes the beneficial ownership.
This was due to the sale of shares to the KingMaker equity scheme, which treated as an option liability issue.
MultiChoice Investment in KingMakers
According to MultiChoice, sports betting is a natural extension of the MultiChoice video entertainment platform to further enhance its product offering.
“The global sports betting market is booming.
Africa, which accounts for just 2% of global sports betting revenue, faces significant momentum as it needs to catch up.”
He added that to capture the majority of growth opportunities in Africa, KingMakers is ready.
It will also benefit from SuperSport’s strong brand and continent-wide reach, as well as MultiChoice’s regional reach and insights.
It sounded like a great business on paper, but the challenges of starting a business in Africa quickly became apparent.
KingMakers does not keep its promises. We managed to increase our sales, but the costs associated with this growth were much higher than expected.
Sales increased, but the company’s profits did the opposite. Since acquiring MultiChoice, KingMakers’ losses have skyrocketed to all-time highs.
Kingmakers reported an after-tax loss of US$28 million (R500 million) in the most recent financial year.
Multichoice attributed its record losses to investments to further expand its business and losses on borrowings from Nigeria totaling $13 million.
Expansion plans did not live up to expectations, and Kingmakers abandoned its operations in Kenya and Ethiopia.
In its latest financial results, MultiChoice announced that rising discount rates in Nigeria led to a write-down of R2 billion in the value of KingMakers.
Multichoice said its current 51.23% stake in Kingmakers would be worth R4.6 billion after write-offs.
Simply put, this means that MultiChoice lost about R1.3 billion through its investment in KingMakers.
Looking at KingMakers’ financial performance, it’s not hard to see why the write-down occurred.
The investment in KingMakers has not created value for MultiChoice’s investors, and the company has performed poorly since the acquisition.
KingMakers revenue
KingMakers profit
