Light & Wonder quits Nasdaq for ASX in major Australian market win
In a rare win for Aussie capital markets, this low-profile consumer tech company is jumping ship. This could deliver a new top-50 option for fund managers.
In a rare win for Aussie capital markets, US gaming machine and software maker Light & Wonder will move its listing from Nasdaq to the ASX later this year.
It’s a profound statement after a rush of large Australian companies, such as Atlassian, James Hardie and Amcor, have sought the lure of the bigger, deeper US markets.
Still, it’s not all totally new ground for Light & Wonder, the company that makes poker machines and the software behind online gaming. It has plenty of Australian links. It’s backed by fund manager Caledonia, and chairman Jamie Odell and chief executive Matt Wilson are both former top executives at bigger ASX-listed rival Aristocrat. And it held a secondary listing here for the past two years.
Light & Wonder will continue to be headquartered in the casino capital of Las Vegas, but the shifting of the listing delivers a much-needed large cap stock to Australia. Light & Wonder is currently valued at around $12bn, putting it on the cusp of the top 50. Light & Wonder briefed its US shareholders about the plan overnight. Bankers Barrenjoey, Jarden, Goldman Sachs and JP Morgan are advising on the exchange switch.
Odell, the former CEO of Aristocrat and a one-time Foster’s executive, says it may not work for all companies, but the circumstances are right for Light & Wonder to make its move.
It’s also a powerful argument for the clustering of companies, where markets develop into regional champions for certain sectors. This can build out entire investment ecosystems. Canada’s TSE is know for attracting mining explorers, London’s LSE in financial services. Australia’s ASX aims for everything.
The business itself emerged from Nasdaq-listed Scientific Games when US billionaire Ron Perelman sold his cornerstone stake in the then debt-heavy company to Caledonia. Since then under Odell, and Toni Korsanos another former Aristocrat executive, businesses like lotteries were sold off to pay down debt. Scientific Games was renamed Light & Wonder.
“We were a pretty small fish on Nasdaq relatively and over the years we really understood the investors in the market backing us were Australian,” Odell says in an interview.
Following the secondary listing Odell says it was clear interest in the stock was coming from Australian investors. Today names like Hesta, AMP, Rest and Tesltra Super hold the Australian scrip.
“There’s real knowledge in this market on the ASX about gaming.”
This is largely due to the ground forged by the $43bn Aristocrat that has built up the expertise among fund managers and analysts.
It was immediately apparent following the secondary listing on the ASX, where local interest has steadily grown to the point where Australian investors move from 9 per cent to around 40 per cent today. That was all organic flows as more investors were looking for diversification.
At the same time, the Nasdaq gamers have been hollowed out. Players such as IGT and Everi have been privatised, leaving few US domestic comparatives to measure against.
The prospect of exposure to the wave of passive funds that’s been driving Australian shares also makes for a compelling argument. As a top-100 company, this puts Light & Wonder on the radar of index funds, and is expected to deliver additional momentum over time.
However, Odell says the focus should be on fundamentals. It’s a young company growing in its existing casino and gaming market and social casinos. Some 70 per cent of revenues coming from the US is exposed to consumer spending. And its core business is gaming software.
“When I put those three together: growth company; a tech company; US exposure, it makes it quite unique, in my view, on the top companies here,” Odell says.
There might be some turbulence along the way. Odell concedes that some large US investors won’t have a mandate to invest in an Australian company so could be forced to offload their stakes. However he expects this will be made up by the number of new funds both – passive and active – expected to come onboard.
johnstone@theaustralian.com.au
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