Q & A: Javaid Aziz

In the I-gaming space, London-listed software provider CryptoLogic has made one of the largest footprints in the tricky Asian market, making two major deals in the region this year alone.

Just this month, the company finalized a $6.1 agreement for a significant minority stake in a Singapore-based game development and design company.

IGN spoke with CryptoLogic Chief Executive Javaid Aziz, who shared a little bit of his company's approach to establishing a presence in a market powered by its enormous -- and growing -- population.

IGN: This year, the company has announced deals with 568 Network and Mikoishi Studios. In terms of strategy, can you talk about how the company went about securing these partners?

Aziz: We hired a managing director for our Asia business and he has hired some great what I call "business development guys," and we sat down and articulated our strategy and how we wanted to develop the business in Asia. The first thing we decided was: Do we buy a business? Do we build a business? Do we partially buy a business and build alongside that? What we decided was that the Asian market was just so important and was growing so fast that, from a speed perspective, we'd be better off buying building blocks and putting them together at a later stage.

So, the people we've hired in Asia are knowledgeable about how to do M&A transactions, and they really do understand technology and software as well. So, this may be a disappointment for some, but we did not use professional advisors because we felt that we knew best our own business and what our strengths and weaknesses were. But we used an associate and various affiliates in the Asian sphere, and we are also fortunate in that one of our main board members is from Singapore. He runs a law firm there and is very well connected.

So, it's a combination of things which led us to make these two investments and we're very pleased with them. The first one, 568, is delivering against all its short-term targets and we are very bullish in terms of that investment.

The second one, Mikoishi, just started, but there is a major project that we're jointly running with them to develop the poker market in Korea.

So, that's how we came to start it up and how we are managing it.

IGN: What advice would you offer other software providers looking to build their presence Asia?

Aziz: Find companies whose management teams are really focused on what they are trying to do, and find companies who've got a real unique proposition. Thirdly, find a company who has got traction, or who is about to get traction and who can benefit from your know-how and your expertise. This is an area which could take many millions in investment from people and they'd waste it if they did so in a hap-hazard way.

IGN: The Financial Times reported in August that you planned to spend the majority of the company's then $92 million in net cash on Asian acquisitions over the next year. To what extent (if it all) is this true?

Aziz: Yeah, we are going down that track. We have made two investments in Asia. We have also made to investments in Europe: one in Sweden called Parbet, and the other was a very exciting URL in the U.K. called casino.co.uk.

So, our major focus is to use our cash to develop the Asian market; however, we are looking at other very significant acquisitions as well which would have more of a global impact and would take a fair slug of this cash. So, generally speaking, what I said to the Financial Times in August is true -- the focus is on Asian acquisitions -- but if something else exciting comes along in Europe then we will certainly address that.

IGN: Is the company still in the bidding process to run sports lotteries in Taiwan and Vietnam?

Aziz: No. We are not looking at doing anything at the moment in Taiwan or Vietnam.

IGN: Can you expand on that?

Aziz: It's just a question of the sheer potential. If you were to look at a map of Asia and Southeast Asia and just look at the geography and how large they are, the opportunity's huge. The countries we are focused on at the moment are China, obviously Singapore, Korea and India.

So, those are the four that we are working on in the near term. I could perhaps glibly say, "Oh yes, we are covering all of Asia," but you know it is just so vast that it would be a statement which would lack credibility.

IGN: Looking ahead, how does CryptoLogic see the Asian I-gaming market developing?

Aziz: Well, I'd love to say that there's going to be millions and millions of users for our software in Asia, but that's not true. It's going to be billions and billions.

If you take the Asian population, it is huge; if you take the growth rate, it is higher than Western Europe and America; if you take the penetration of mobile and hand-held devices, it is massive; and if you take the developed nature and otherwise of that infrastructure and legacy systems, it is very low, especially in places like India.

So, basically, they have the power of the population. It's going to be a young population. More play with mobile devices and are usually tuned into the gaming or gambling culture, and no legacy infrastructure to worry about. So, from an opportunity point of view, when you multiply those out you're talking about having access to billions and billions of Asian users, which is just incredible, and I think one would ignore what's happening in Asia at one's own peril.

IGN: In five years, where does the company see itself in Asia?

Aziz: This is a market which is just enormous and we see ourselves as being major players in five years' time. We will make the investment decisions required to get us there as well. I feel very confident that we have the track record to do so, and we are beginning to get traction on the initial investments that we're making.