The Government privatizes Lotteries after 250 years of public gambling management

The Government today decided to privatize 30% of the State Lottery and Betting Society (SELAE) and end 250 years of state management of the gaming sector. The privatization of Lotteries closes a process opened two years ago, when the Gaming Law was modified in order to separate the operator from the regulator, to regularize “online” gambling and to liberalize two thirds of the sector. With about 250 years of history, since Carlos III imported this Neapolitan tradition in 1763, in 2010 Lotteries obtained a net profit of 2,594 million euros, 13.3% less than a year before, while the volume of sales exceeded 9,500 million euros, 2.5% less than in 2009. Despite the delicate economic context, some analysts estimate for Lotteries, which is part of a clearly countercyclical sector, an annual growth of between 3% and 4% in the coming years. Altogether, Lotteries received 9,592 million euros through the nine games it manages: National Lottery, Primitiva Lottery, Bonoloto, El Gordo de la Primitiva, Euromillions, Quiniela, Quinigol, Lototurf and Quintuple Plus, of which 5,323 corresponded to the National lottery.

In 2010, the gaming sector in Spain recorded a decrease in business volume of 9.20%, although for Lotteries the cut was 2.56%. The company itself describes these results in its Annual Report as “not negligible, given the general crisis situation in which the Spanish economy is immersed”. The Council of Ministers approved today the public offer of sale (OPV) of State Lotteries, as part of the privatization process that will affect 30% of the company and that will put into circulation 375,617,760 titles with a nominal value of ten euros each one. Of these, a maximum of 10% will correspond to the “green shoe” or option to purchase a share package reserved for underwriters: Goldman Sachs, JP Morgan, UBS, Credit Suisse, BBVA and Santander. In this way, if the issue premium reaches a similar value, the cash raised with the operation could be around 7,000 million euros, with which the Lottery would be the largest exit to the market in the history of Spain, above the 4,500 million raised by Iberdrola Renovables, and one of the largest in Europe. As explained by the Minister of Development and Government spokesperson, José Blanco, in the press conference after the Council of Ministers, the offer is aimed at both institutional and minority investors, and meets the transparency and publicity objectives required by the Privatization Advisory Council, which approved the operation on Monday. Of the 30% of the company that will go public, 40% will be offered to institutional investors (including international ones), while the rest will be offered to the retail tranche.

Depending on the valuation, Loterías will become the seventh or eighth company in the IBEX-35 index by capitalization, and the president of the company, Aurelio Martínez, estimated in June that it would be around 21,000 million euros. Once the approval of the Council of Ministers has been obtained, the National Securities Market Commission (CNMV) should approve the issuance brochure at the end of next week, which would allow Lotteries to open the books and begin with the “road -show “or tour to investors on October 3. In this way, the stock market premiere could take place on October 20 or 21. The president of Loterías, Aurelio Martín, indicated in April the intention of the company to make the monthly payment of the dividend, a new practice in Spain, which is due to the periodicity of the payments that Loterías made to the Treasury.

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