Second activist investor reveals stake in gambling group 888

An activist investor with a history of pushing for change at gambling companies has revealed a shareholding in 888, just a week after a group of former executives from rival bookmaker GVC said they had bought a stake.

HG Vora Capital Management disclosed on Wednesday that it had a 5.5 per cent stake in 888, in both class A and B shares owned directly by the fund and by its head Parag Vora, a former Goldman Sachs banker.

The New York-based fund already had a stake below the disclosure threshold but increased its shareholding the day after a group of former GVC board directors, including former chief executives Kenny Alexander and Shay Segev, went public with a 6.5 per cent stake. GVC has since been rebranded as Entain.

The presence of both HG Vora and FS Gaming Investments, the consortium of the former GVC executives, sets the stage for a shake-up of 888. Its stock price has languished over the past year because of a series of compliance failings and fast-rising interest rates that have soured its £1.95bn debt-fuelled deal to buy William Hill.

In January, 888’s chief executive Itai Pazner was dismissed at the same time the board revealed it had frozen £50mn of customer accounts because of anti-money laundering failings. The accounts have since been reinstated.

The bookmaker, which is being run on an interim basis by its chair Lord Jon Mendelsohn, a Labour peer, is still hunting for a new chief executive. FS Gaming is pushing not only for a board seat but has also suggested that Alexander, who ran GVC for 13 years, and Stephen Morana, a former GVC independent director who is also part of the consortium, could run the company, according to two people familiar with the matter.

HG Vora backs these efforts to install a new management team at 888 led by Alexander, according to a person familiar with the fund’s thinking.

The fund has a history of campaigns in the gambling industry, including previous investments in US operators Penn National Gaming and Pinnacle Entertainment before they agreed to merge in 2018, and revealing a 5 per cent stake in William Hill just a fortnight before Caesars Entertainment acquired it in 2020.

FS Gaming declined to comment, but according to people familiar with its view its main priority is speedier integration between 888 and William Hill to drive down costs and get to grips with the group’s £1.6bn debt pile.

The consortium also includes Lee Feldman, GVC’s former chair, investment bank B Riley Financial and its investment chief Daniel Shribman. In 2017, GVC bought Ladbrokes and has since rebranded as Entain.

The share price of 888 was £1.18 in early afternoon trading, up nearly 6 per cent on the day before and more than 50 per cent since FS Gaming revealed its stake last week.

“The board remains highly confident in its long-term strategy to maximise value for shareholders,” the group said. “We look forward to updating and engaging with all our shareholders as we continue to deliver against our clear strategic and operational priorities.”