Alchemy Partners is thought to have emerged as frontrunner in the bidding war for Buckingham Bingo, an operator of 10 sites in northern England. Duke Street Capital is also interested in the asset, which is on the block for around £100m, according to sources close to the situation.
The group opened its first club in Preston in 1970 and has since grown to become the third largest operator by volume in the country behind Mecca, which is owned by Rank, and Gala, which is private equity-backed.
Despite their seeming lack of glamour, bingo clubs have become popular for private equity groups because of their loyal customer bases and predictable cashflows. One of the bidders on the current deal said: “Banks are throwing money at anything bingo-related at the moment.” The interest has pushed up margins, with Buckingham slated to sell for well over 10x Ebitda.
While Gala and Mecca are the largest operators in the UK, they are restricted from making further acquisitions by the competition authorities. There are many other multiple sight operators, however, with privately owned Castle Leisure in Wales and listed group Top Ten Holdings seen as the next likely candidates for private equity consolidators.
“We looked at the business but pulled out because the price is pretty full and it is difficult to see where the exit is. If Mecca and Gala aren’t interested in these assets now, I’m not sure why they would be further down the line,” said one bidder that pulled out of the Buckingham auction earlier in the proceedings.
“Another risk in the sector is the possible implication of a smoking ban. It is thought that up to 60% of bingo-goers are smokers, and it is unclear what impact a ban would have on this core market.”
There has also been some comment in the market about the presence of Alchemy bidding at the front of such a competitive auction in a very transparent sector.