In September last year the Gala Group announced the disposal of its loss making Maxims Casino in London, stating that the ‘top end’ operation was not core to its high volume, low stake gaming strategy. Earlier this year there were rumours that Gala would seek stock exchange listing. The majority of issued share capital of the company is held by funds managed by the private equity firms Candover and Cinven, which bought Gala in February 2003. At that time the company was valued at just under US$2 billion. An agreement with a leading European-based private equity firm, Permira Advisers Ltd, to invest £200 million (US$358 million) values Gala at US$3.39 billion.

The Gala Group, based at New Castle House in Nottingham, operates 166 bingo clubs and 26 casinos in Great Britain. It also has a casino hotel on the Isle of Man and a casino in Gibraltar. Permira was founded in 1985 and acts as adviser to 18 Permira Funds totalling around US$13.3 billion with investments in 15 countries. The company states ‘We have always offered a fresh approach to private equity. Our name encapsulates this approach – Permira is Latin for "very surprising, very different". We search consistently for new ideas. We embrace contrarian thinking. We welcome complexity.’ When Permira’s investment transaction is completed it will become joint owner of Gala with Candover and Cinven and Gala debt will be refinanced.

Having abandoned what would have been one of the biggest market flotations of 2005, Gala has agreed a US$2.3 billion refinancing package. It is thought that the three private equity firms will hold stakes of around 30%, with Candover and Cinven retaining a majority. The European private equity market in the second quarter of 2005 has reached a record figure for recorded transactions, resulting in nearly a 60% increase in buyout values from the previous quarter. An Initial Public Offering (IPO) for Gala may be off the cards for the moment but many are betting that at some point in the future the company will go public. (E-08.19.05)

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