Parvus activist funds builds shareholding in Flutter Entertainment

By | May 30, 2022

Flutter Entertainment Plc has disclosed that London activist fund Parvus Asset Management has built a 7.1% shareholding in the FTSE100 betting group.

The activist’s shareholding was brought to the public’s attention, as Flutter informed investors that Parvus had reached its ‘7% threshold on voting rights’ that required disclosure to markets.

Parvus’ 7.1% shareholding has been built by ‘way of equity and option swaps’, as the activist fund has avoided traditional share buys to accumulate its holdings in Flutter.

Equity swaps are a type of financial derivative that allows two investors to temporally swap cash-for-shares for a determined period of time.

Flutter notified that investors participating in equity swaps with Parvus had granted the activist fund voting rights.

“Parvus Asset Management Europe Limited has been appointed as Investment Manager to a number of funds,” read Flutter’s filing. 

“Under the terms of the various investment management agreements, Parvus Asset Management Europe Limited holds the power to vote any physical shareholdings held by these clients.”

A breakdown of transactions has seen Parvus enlarge its shareholding in Flutter from 2.8% as reported in December 2021 to 7.1% as of 30 May.

Of significance, the transactions have seen Parvus become the third-largest voting rights holder of the FTSE firm’s investor portfolio – behind US pension fund Capital Group (14%) and LSE private equity group Caledonia Investments (10%).

Parvus is no stranger to gambling Plc investments, having taken activist positions in William Hill and The Stars Group Inc, prior to 2020 – in which it demanded that the businesses be transformed for a merger or sale.

The London activist fund is led by former Merrill Lynch equities trading specialist Edoardo Luigi Mercadante and as yet has provided no comment on its investment in Flutter.

2022 has seen activist eyes circle online gambling Plcs. During May, Corvex Management LP the hedge fund of activist investor Keith Arlyn Meister was forced to disclose that it had built a 10% shareholding in Kindred Group Plc.

In its statement to the Stockholm Nasdaq, Meister fund outlined that it had no ‘pre-determined path for Kindred’, but had alerted its executive leadership team to “retain a leading, global financial advisor to evaluate strategic alternatives, including the potential value that could be achieved through a sale or business combination”.

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