Penta Investments contemplates sale of Fortuna Entertainment

Penta Investments is considering a potential sale of Fortuna Entertainment Group, its betting and gaming operator.

The investment group confirmed that it is collaborating with JPMorgan to explore options for Fortuna, the largest betting firm in Central and Eastern Europe, Reuters reported.

The process "underscores Penta's commitment to meticulously evaluating alternative avenues for the future development of the franchise, ensuring sustainable growth and long-term value creation," a spokesperson of the company said in an email response to Reuters.

Quoting sources familiar with the matter, the report said that a sale could value Fortuna, operating across the Czech Republic, Slovakia, Poland, Croatia, and Romania, at up to 2 billion euros ($2.17 billion). The process is still in its early stages, with Penta anticipated to proceed with an auction process towards the end of the summer.

Potential bidders for Fortuna are expected to include European gambling operators and private equity firms with assets in the sector. It is estimated that Fortuna's annual earnings before interest, taxes, depreciation, and amortization (EBITDA) will reach around 200 million euros this year.

These sale discussions occur amidst changes in the gambling sector landscape, particularly regulatory shifts in the UK and Ireland aimed at curbing problem gambling. Additionally, larger operators are facing challenges stemming from higher borrowing costs associated with debt from acquisitions.

Entain, a UK-listed company, is also reviewing options for its overseas brands following pressure from activist investors over its stagnant share price.

Penta took Fortuna off the Prague and Warsaw stock exchanges in 2018 after acquiring the remaining shareholders through its gambling subsidiary Fortbet.