Flutter Entertainment has gained a new heavyweight shareholder after Canadian multinational bank, the Canadian Imperial Bank of Commerce (CIBC), acquired a 5.3% stake in the operator group.
The CIBC, the fifth largest bank by revenue in Canada, previously held no shares in the gambling group.
However, following a regulatory notice on the London Stock Exchange on 26 May, the bank has now taken an $899m stake in the FanDuel owner.
It’s all change at Flutter Entertainment
Flutter Entertainment – which also owns the PokerStars brand, as well as the Paddy Power, Betfair and Sky Betting and Gaming brands in the UK – has faced a rocky start to the year, with its share price falling by 61% in the last 12 months alone.
This has then been compounded by a series of internal restructuring moves, which saw FanDuel CEO Amy Howe step down, FanDuel President Christian Genetski assume the role of CEO, and Dan Taylor, CEO of Flutter’s international arm, become President of Flutter Entertainment.
The restructuring was announced shortly before the company released its Q1 earnings report, which detailed that Flutter Entertainment had slightly lowered full-year guidance to $18.3bn, down from $18.4bn.
While the drop might seem minor, it could arguably be seen as a dip in confidence that the operator group can navigate the regulatory changes and market dynamics which it continues to face across multiple markets.
Flutter’s internal struggles were also felt externally, as its rating was downgraded by Deutsche Bank, which cut its target price from £147 to £124 per share – a result of slower US growth and economic pressures within the UK market.
Weeks prior, Citi also cut its price target for Flutter by more than half, going one step further by also downgrading the stock from buy to sell.
However, this new vote of confidence from the Canadian bank will likely come as a welcome boost for Flutter Entertainment.
The Canadian Imperial Bank of Commerce becomes the latest in a long line of investors that have snapped up shares in the London-listed operator group. It joins recent investors including:
- Group CEO Peter Jackson
- Group Chair John Bryant
- Non-Executive Officer Stefan Bomhard
- Blackrock – which recently upped its stake to over 5%
- Cayman Islands-domiciled billionaire Kenneth Dart increased his control to 27% last week
- London-based activist investment fund Parvus Asset Management doubled its stake in Flutter to 10% two months ago.
- Bank of America – which increased its shareholding from 9.6% to 10.4%
At the time of writing, Flutter Entertainment’s share price stands at $97.38. While the operator group has experienced dips in its share price in the last few months, some are anticipating that this’ll soon rebound as the company enters a new era of leadership.
A shift in attitude from banking institutions?
For a long time, major traditional banks have avoided making substantial investments within the gambling industry, likely due to continued regulatory volatility that continues to face the sector.
However, news that CIBC has suddenly taken a considerable stake in the operator, combined with Bank of America’s 10.4% stake, marks a cultural, attitudinal shift in how the banking industry views gambling as an investment opportunity.
Upon first assessment, it appears that institutional finance is now perhaps viewing global sports betting giants less as a volatile option, and more like indispensable tech and entertainment infrastructure.
Does this mean that Flutter will soon be viewed in the same way as acquiring stock in Apple or Disney? Maybe not.
However, the new investment from the CIBC has opened up the door to other, perhaps more conservative, banks to start injecting liquidity into the wider gambling market.
