Apax Partners Sells Last of Genius Sports Stake

Posted on: July 10, 2024, 10:14h. 

Last updated on: July 10, 2024, 10:21h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Apax Partners, LLP sold the last of its 10% interest in Genius Sports (NYSE: GENI), ending a more than six-year relationship between the private equity firm and the sports betting data provider.

Genius
A slide from a Genius Sports investor presentation. Apax Partners sold the remainder of its investment in the sports betting data provider. (Image: Genius Sports)

The full monetization of its Genius stake arrived after Apax trimmed that position by 10% last September, and further in the first quarter of this year. In April, Gabriele Cipparrone, a partner at Apax, stepped down from the Genius board of directors.

Apax has been a tremendous partner to Genius Sports, and we are grateful for their valuable insight and expertise over the last six years,” said Genius co-founder and CEO Mark Locke in a statement. “Today marks the conclusion of a very successful partnership, and we look forward to welcoming this next chapter with the ongoing support of our high-quality institutional shareholders.”

Shares of Genius are off 1.83% in early trading on the news.

Near-Term Selling Pressure, Long-Term Potential for Genius

Apax is liquidating a position comprised of about 20 million shares of Genius, which is more than 10 times the stock’s average daily volume 1.61 million shares. At this writing, turnover in the shares is close to 3.6 million, indicating some selling pressure is suppressing Genius shares today.

While the Apax sale comes at a time when Genius is lower by 12.94% year to date, it could be a positive over the long term. The Apax transaction could remove a sponsor distraction, boost liquidity in Genius shares, and compel investors to reexamine the company’s attractive fundamentals.

London-based Apax became the majority owner of Genius in July 2018, when it purchased the betting data firm from founders, management, and funds advised by Three Hills Capital Partners. Apax’s stake in Genius was reduced to 28% in April 2021, when the betting tech company went public via a merger with special purpose acquisition company (SPAC) dMY Technology Group, Inc. II —  a transaction valuing the data outfit at $1.5 billion. The company’s current market capitalization is $1.15 billion.

Apax has raised $77 billion in financing and primarily invests in companies in the consumer internet, healthcare, services, and technology spaces. Genius was the private equity firm’s lone stake in a company with direct wagering industry exposure.

Apax Sale Not an Indictment of Genius

Private equity firms typically aren’t permanent investors in the companies in which they hold stakes and, as noted above, Apax had been reducing its Genius stake, indicating full monetization was likely.

At six years, Apax’s relationship with Genius was inline with the average private equity holding period seen over the past decade. Before that, the typical private equity investment spanned three to five years, according to Private Equity List.

With Apax out of the picture, the largest institutional investor in Genius is Caledonia Investments. The NFL is the next-largest shareholder. Other holders of Genius equity include Cathy Wood’s ARK Investment Management and BlackRock, among others.