Silverfleet Capital

Moliflor Loisirs

Business overview

Moliflor Loisirs is a French casino owner and operator, created by Silverfleet Capital in June 1999 with the acquisition and take private of an operator of seven casinos in the Languedoc-Roussillon region of France and the simultaneous purchase of the casino of Uriage near Grenoble.

Investment rationale

After two aborted attempts to acquire casino groups in 1997 and 1998, we became known in the market as having a keen interest in the French gaming industry. Consequently we were approached by Philippe Gazagne, ex co-president of the Groupe Barrière, who was putting together a management team.

We had established that there was a genuine consolidation opportunity in the French gaming industry, where more than half of the sites were at that time still owned by private individuals and families. With the establishment of our platform company, we backed an ambitious buy and build strategy to create one of France’s leading casino groups, applying professional management methods to formerly owner-managed businesses.

Value creation

Five acquisitions were successfully completed, adding a total of six casinos, and a seventh site was built in Port Crouesty. These acquisitions took the total number of casinos owned and operated by the group from eight in June 1999 to fifteen in April 2001 and in this time, we increased our original investment of €25million by more than three times whilst the profit at EBITDA level, starting at €10million, grew five-fold. This was in part thanks to the positive environment of the French gaming industry, which was experiencing a double-digit growth rate, but more importantly systematically implementing professional management methods in the acquired sites.

From a two-man team at completion we helped form a complete management team within six months and supported management in setting up the monitoring and control systems necessary for a group of this size.

Outcome

In mid 2001 it was agreed with management to look for an exit, and in March 2002 the business was sold in a secondary buyout for €402million, generating an IRR of 52% and a multiple of money of 2.4x.