The gaming and entertainment company Gold Reef Resorts, which operates five casinos in South Africa, is apparently in talks with a private equity consortium about a US$1.37 billion cash takeover. Following a prolonged court case of around 8 years, Gold Reef Resorts acquired the seventh and final casino licence in the lucrative Gauteng province in November last year. Last March the company reported robust trading at all its casinos and announced a 30.2% growth in revenue to R1.5 billion (US$201.5 million) for 2006.

The offer by Ethos Private Equity Fund and including management and black investors is said to have the approval of Gold Reef’s biggest shareholders. Ethos specialises in acquisitions involving management equity participation, for medium-to-larger South African and African buy-outs, expansion of businesses and niche privatisation opportunities. In October last year the firm closed its Ethos Fund V, the largest fund in Africa. CEO Andre Roux at the time commented, 'The oversubscribed response to Ethos Fund V is clear evidence that, when it comes to private equity, Ethos has the experience and track record to deliver.”

He added, “Together with a diverse team of professionals, with an extraordinary depth of experience and ability, I have every confidence that Fund V will enable Ethos to make large acquisitions with like-minded local and international partners in South Africa and Africa. We are excited about the prospect of deploying Fund V, and are actively assessing a number of opportunities.'

In an interview earlier this year Gold Reef CEO Steven Joffe pointed out that casinos in South Africa had brought valuable infrastructure to the country, enabling it to host the 2010 World Cup soccer tournament. South Africa’s increasing black middle class and larger disposable incomes have maintained a buoyant casino industry. Another gaming company, Peermont Global, was recently delisted and taken private. The Gold Reef deal is subject to shareholder approval and finalisation of funding by the black investor group. (E-08.13.07)

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