Nazara Technologies is aiming to raise INR 1,000 crore from an IPO, which is expected by the February-March next year. The company has engaged ICICI Securities and Edelweiss Financial Services for the task.
With this IPO, the Mumbai-based Nazara will become country’s first listed company in the gaming business. The public issue is expected to change the perception among investors of the gaming space, which has not seen any big bang deal unlike online commerce and event video content.
The leading mobile games publisher, founded in year 2000, is also expecting an evaluation at INR 30-35 thousand crore, according to an Economic Times report. The evaluation will give Nazara’s investor WestBridge Capital an 80 times return on the investment made 12 years ago.
The public issue is expected to give a partial exit to WestBridge Capital, which has invested a total of $3 million in two tranches in 2005 and 2007, for a 55% majority stake in the company. Founder Nitish Mittersain and his family hold the remaining 45%.
“The company is planning to finish the listing process by end of March 2018, and is expecting a valuation of 30-35 times projected profit after tax (PAT) of Rs 100 crore in FY19,” ET has quoted source close to Nazara as saying.
Nazara had a gross customer billings of over INR 550 crore with net a profit of of INR 66 crore, according to the company report. It has been profitable since 2007.
Expansion of Jio, smartphone penetration and data consumption will further lead the mobile gaming market in India from $200 million in 2016 to $3 billion in 2019, according to a FICCI-KPMG report last year.
Over the last decade, Nazara has also expanded globally to 74 countries as publisher thus diversifying its revenues across Africa and Middle East as well. The plans for an IPO for Nazara come at a time when the company is looking to expand from its focus on casual mobile gaming to become a broader ecosystem player.
Earlier this year, Nazara Games has committed to investing INR 136 crore in its eSports venture over the next five years. Nazara Games eSports league will enable gamers hooked on online games such as Dota 2 and League of Legends to to participate in tournaments, catch live webtv programmes and chat on forums.
Another area it is looking to foray into includes real money skill-based gaming, for games like teen patti and poker. It is also looking to actively pick up stakes in gaming startups, like last month it invested in game development studio Moong Labs, which it had partnered with to launch a 4D cricket game featuring Virat Kohli.
“Gaming is always seen in the Indian entertainment scenario as the poor cousin where questions about revenue and scale are perpetually doubtful,” Jehil Thakkar, partner at Deloitte, tells ET. “It will alter the perception of investors who have been wary about the gaming sector and in the next 5-10 years one can expect more Indian gaming firms to go for an IPO You will even see traditional entertainment players eye gaming as an opportunity more seriously.“
Mittersain has established Nazara Technologies in 2000. The company is one of the top profitable companies in India’s e-gaming space. The company is popular for its Chhota Bheem game.