Home > Finance > No IPO plans ‘at the moment’ for booming Cherry unit

No IPO plans ‘at the moment’ for booming Cherry unit

| By iGB Editorial Team
Executive chairman stresses benefits to shareholders of status quo

Cherry has played down the likelihood of an IPO for its Yggdrasil game development unit in the near future after the Swedish company’s online gaming brand, ComeOn, drove a 58% increase in group revenue to SEK899m (£77m/€86m/$98m) in the third quarter.

Across the group, organic growth improved by 46%, helping to generate quarterly earnings before interest and deductions of SEK258m – a 130% increase.

Marketing as a share of revenue dropped to a record low of 31%, even though the company spent more on activations in Q3 than ever before, according to executive chairman Morten Klein (pictured).

Yggdrasil – which recently signed agreements with Paf and Veikkaus in Finland, and Svenska Spel and ATG in Sweden – posted a 62% rise in operating revenues to SEK71.5m and a 26% increase in earnings before tax to SEK19.3m.

When asked directly in a conference call this (Wednesday) morning about the possibility of floating Yggdrasil, Klein said that there are currently “no plans”, although he added: “Potentially, yes – maybe in the future.”

He added: “All companies have a high value by being part of Cherry at the moment, but at the same time, we know from history that we have companies that can stand alone.

“Doing an IPO for a company takes a lot of focus. At the moment it’s good for the companies to have a focus on growth and being No.1 in their markets.

“We’re looking at all companies in the portfolio to see if there will be that possibility [of flotation].

“At the moment we have no plans on doing that and we think it creates higher shareholder value to keep it as it is.”

Acting CEO Gunnar Lind added that Cherry’s game development units, Yggdrasil and Highlight Games, “had a good quarter”. Cherry acquired a majority stake in Highlight Games in August.

He said: “The companies are run by strong entrepreneurs and skilled employees who understand what works in the market.”

ComeOn, which applied for eight Swedish gaming licences in September ahead of the re-regulation of the market at the start of 2019, accounted for a whopping 81% of the group’s sales after posting a 63% rise in Q3 revenue from SEK448m to SEK732m.

The mobile share of ComeOn’s net game win improved from 58% to 70%, with 83% of the online gaming brand’s revenues generated by casino games.

“ComeOn has succeeded very well with the broad plan of action that was brought into effect just over a year ago,” Lind said. “All employees are making a tremendous effort and the company is now able to use more of its time and energy to establish even stronger positions in existing and new markets like in Poland, as well as with new brands such as Blitzino and PZBuk.”

Just days ago, Cherry seized full control of affiliate company Game Lounge, which registered a 54% rise in revenue in the third quarter from SEK45m to SEK69m.

Subscribe to the iGaming newsletter