Advent International has announced that it has signed an agreement with Chilean operator Enjoy.
Under the terms of the new agreement Enjoy will remain publicly traded while the founding family of Enjoy, the Martinez family, will retain a substantial equity ownership position in the company.
Advent’s investment will be made through a capital increase of up to US$170m and tender offer, according to Chilean regulation, for up to 100 per cent of the shares that shareholders are willing to sell in the tender offer. Bonds issued by Enjoy increased by nearly as much as eight points on on the back of the news.
Chairman of Enjoy’s Board of Director and a member of the founding family Javier Martinez in a press release welcomed the new agreement. “We believe that Advent will enable us to build upon our momentum and achieve our growth goals over the long term to perpetuate my father’s legacy,” he said.
Meanwhile Gerardo Cood, Chief Executive Officer of Enjoy said: “Advent has a robust track record of investing in and growing companies with strong operations and we welcome their expertise.
“Advent is the right partner to help us as we continue to focus on developing the entertainment industry and leveraging expansion opportunities in Chile and the surrounding region. We are excited for our path forward and remain committed to providing premium gaming and hospitality services to all of our casino and resort guests.”
Mauricio Salgar, a Managing Director at Advent International in Bogotá said: “We are excited to partner with the Martinez family and the outstanding Enjoy management team. This transaction will be our first direct investment in Chile and in the fast-growing gaming industry. We believe Enjoy is well-positioned to continue capturing growth opportunities through a variety of initiatives and we look forward to supporting Gerardo and his team.”
The final agreement between Enjoy and the private equity firm comes after a long period of negotiations.
A deal was initially agreed upon between both companies in September 2016 when, after an Extraordinary General Meeting of Shareholders, Enjoy approved a capital increase which would allow Advent International, to enter the business and develop a joint venture. According to the terms of the agreement Advent International would pay at a price of US$80 per share for a total of 650.741,492 shares in order to raise a total of US$76.5m. This figure is equivalent to around 30 per cent of the company’s value.
However in November 2016 Advent announced that the deal was on hold for the time being. In a letter to Chile’s securities and insurance regulator (SVS) Cood said that negotiations with the fund “are suspended pending further clarification of the process of the granting licenses for casino operations in the communes where municipal casinos operate, (and) which are currently being reviewed by the Supreme Court. ” Enjoy currently has the licence to run the municipal casino in Coquimbo, Viña del Mar and Pucón.
However, since then Enjoy has acquired 55 per cent of the shares of Baluma SA meaning that Enjoy now finally has full ownership of the Conrad Punta del Este Resort. In April it was revealed that Enjoy had issued a public bond in the Unites States in order to finance the purchasing of the remaining 55 per cent of the property after the company had announced that it had reached an agreement with its bondholders to raise the limit of its debt and therefore obtain the money for the operation of the Conrad. The agreement signed between Enjoy and Caesars Entertainment also gives the company the option to buy and sell shares of the rest of the Baluma package that was held by the US firm.
Founded by the Martinez family in 1975, Enjoy has over 40 years of experience in the industry and has become a leading gaming operator in Chile and Uruguay. The company owns and operates ten casinos and ten hotels in Chile, Uruguay, Argentina and Colombia, with more than 6,000 slot machines, 350 gaming tables, 1,200 hotel rooms and 30 restaurants.
Advent has been operating in Latin America for over 20 years and during this time has completed 55 investments across the region. Its network of 40 investment professionals working across Bogotá, Buenos Aires, Lima, Mexico City and São Paulo is the largest dedicated private equity team in the region. Throughout Latin America, Advent has raised over US$6bn of capital focused on the region. Its latest Latin American fund, LAPEF VI, raised in 2014, has US$2.1bn of capital.