Lottotech: oversubscription prompts review of allotment to favor small investors
Those who subscribed for less than 5,000 shares will receive all of the shares applied for while those who made offers for more than 5,000 shares will be guaranteed the first 5,000 shares only and will receive 22.17% of excess above 5000 shares. (Image: Lottotech)
Mauritius gaming major Lottotech’s offer for sale was blessed with high investor enthusiasm, with a whopping 12,385 applications having been received for 254,234,986 shares amounting to Rs 2.5 billion, as at close of offer on May 16, 2014.
The subscribed for sum of Rs 2.5 billion represents a subscription ratio of 2.99 times, against Lottotech’s goal to raise Rs 850 million with the sale of 85 million shares at Rs 10 each.
Given the oversubscription, the company finds itself in a position to refuse several offers.
The procedures for refund of excess application money have started at the close of last week on May 29, 2014, while allotment letters will be dispatched as from tomorrow, June 4, 2014.
The board noted that on June 11, 2014, Lottotech will make its official entrance on the Stock Exchange of Mauritius, where particular shares can be bought or sold.
On the first day of trading, Lottotech will make available up to 50,000 ordinary shares, at a price of Rs 10 per share.
Due to oversubscription, the board was obliged to revise its allotment criteria and has decided that those who subscribed for less than 5,000 shares will receive all of the shares applied for – 13.5 million of shares to be allotted in all.
Regarding those who made offers for more than 5,000 shares, they will be guaranteed the first 5,000 shares only and will receive 22.17% of excess above 5000 shares. In this lot, 65.8 million of shares will be allotted.
Approximately 5.6 million shares will be distributed to retailers of Lottotech, directors and employees of the Gamma group and the State Investment Corporation (SIC) who will pay Rs 9.5 per share, benefiting from a 5% discount.
Of these reserved shares, investors who subscribed for a lot not exceeding 100,000 shares will receive 100% of shares subscribed for. In this lot, 3.6 million shares are at stake.
On the other hand, applicants who made offers for above 100,000 shares, will receive at first 100,000 shares, and an additional 22.17% of excess above 100,000 shares. This lot comprises 2.01 million shares.
According to the latest annual report, the company notched a turnover of Rs 3.9 billion and a profit after tax of Rs 343.46 million for the 18 months ended December 31, 2013.
While the record jackpot of Rs 77 million in December 2013 played an important role in overall sales, the company also realized sales growth at the lowest jackpot levels, creating 28 jackpot winners and 39 millionaires during this period.
However, the July to September 2013 had the lowest aggregate jackpot offering (Rs 164 million) since July 2010 as the players were lucky and Rs 5 million jackpots were frequently won, thus not allowing for rollovers.
“In spite of the current restrictions imposed by the Gambling Regulatory Authority (GRA) to withhold approval of new online games and certain enhancements, the forecast for the next five years projects increases in revenue and profits,” noted the management on future outlook.
Finally, the company engaged Ipsos Reid, an international firm with deep research experience in lottery worldwide, to conduct its first market segmentation study this year.
The results of the 2013 ‘Market Segmentation Study’ confirmed that Loto continues to be a leading brand in Mauritius with 100% awareness and 75% participation from the adult population, spread almost equally across men and women.
The per capita turnover as percentage of per capita GDP is comparable to USA and UK lotteries at 0.4%. With just four years of operation, Mauritius ranks 102 globally in per capita sales with high participation rates.