National Lottery 

Company: National Lottery

Transaction: €405m Lottery Licence Sale

Davy Role: Financial Adviser to the Department of Public Expenditure and Reform (“DPER”)

SUMMARY

In February 2014, Davy completed the sale of a 20 year National Lottery licence on behalf of the State to a consortium for €405m. This followed a c. 24 month engagement with the DPER comprising two distinct mandates.

Analysis of Possible Options relating to a future National Lottery Licence

Following a competitive tender process, Davy was retained by the DPER to carry out an analysis and prepare a consultation report in relation to the possible options for the State relating to the next National Lottery licence. This involved assessment of the market conditions for a possible sale of a licence, scenario analyses to inform the appropriate structuring of the next licence, risk factor analysis, valuation methodologies and the provision of a recommendation to the DPER based on Davy’s findings.

Davy prepared a detailed business case and financial model and conducted a broad market consultation before presenting its key findings and a recommendation to the DPER.

Design of Licence and Sale Process

Davy was appointed to implement the recommended option and to design a 20 year National Lottery licence for sale to a secure an up-front receipt of funds for the State while safeguarding a number of important policy issues. Some of the key workstreams involved included:

  • Providing economic, commercial and financial advice in relation to the structure and terms of the licence taking account of the legislative, regulatory and economic environment;
  • Providing advice in relation to the structure of the competitive auction process and managing market communications;
  • Preparing and disseminating key data to bidders during the bidding process and advising on the evaluation of bids; and
  • Concluding the licence with the preferred applicant following the competition.

The transaction culminated in the announcement 27 February 2014 by the Minister for Public Expenditure and Reform that the next licence to operate the National Lottery was granted to Premier Lotteries Ireland for €405m, half of which is earmarked for the construction of a new Children’s Hospital.

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