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IIFL’s pre-IPO PE fund bets $51 mn on mobile game developer Nazara

01 December, 2017

In what could be a clear indication of an imminent initial public offering from Nazara Technologies Pvt. Ltd, IIFL Special Opportunities Fund has bought a minority stake in the mobile game developer for $51 million (Rs 330 crore), it said in a statement.

The mobile gaming company didn’t disclose the size of the stake IIFL’s pre-IPO fund has acquired.

IIFL Special Opportunities Fund mainly invests in companies before or during their IPOs. Nitish Mittersain, founder and managing director of Nazara Technologies, acknowledged that the investment could be a precursor to the gaming firm’s proposed IPO. “We are looking at our options, it might lead to an IPO,” Mittersain said.

WestBridge-backed Nazara is preparing to float its IPO by the end of this financial year at an ambitious valuation of around $500 million.

In November 2016, VCCircle had first reported about the Mumbai-based gaming company’s public market listing plans.

Nazara would become the first Indian gaming firm to tap the public market if its plan materialises.

Media reports in September suggested that Nazara would offload stake worth Rs 1,000 crore through its IPO.

The company has mandated ICICI Securities and Edelweiss Financial Services for the IPO.

Nazara plans to complete the listing process by the end of March 2018 and is expecting a valuation of 30-35 times the projected profit after tax of Rs 100 crore for FY19.

Established in 1999 by Mittersain, Nazara grew after the dot-com bust and raised $3 million from WestBridge Capital. WestBridge owns a majority stake in the firm after factoring in the convertible preference shares it holds, as per VCCEdge, the data research platform of News Corp VCCircle.

The company has expanded to over 74 countries over the last decade. It has been profitable since 2007.

According to VCCEdge, Nazara reported revenues of Rs 220 crore for FY16, clocking 40% CAGR over the last four years.

This April, Nazara invested an undisclosed amount in London-based mobile games studio TrulySocial. London Venture Partners and Drussila Hollanda-Grönberg, game lead at Finnish gaming company Supercell, also took part in the funding round. The investment was part of Nazara’s strategy to help foreign gaming firms enter the Indian market.

It had also picked 26% stake in London-based mobile gaming studio Mastermind Sports Ltd, which launched CricBet, a real-time prediction game.

IIFL Special Opportunities Fund has raised around $1 billion and has invested in a number of companies in the last few months including ICICI Lombard, NSE, Capacite Infraprojects Ltd, Indian Energy Exchange and Reliance Nippon Asset Management Company.

A report titled ‘Mobile Gaming on the Rise in India’ published by NASSCOM Gaming Forum and San Francisco analyst firm App Annie stated that mobile game downloads in India are expected to grow at a CAGR of 58% over the next five years, going from 1.6 billion downloads in 2016 to an estimated 5.3 billion downloads in 2020. This would be led by the growing adoption of games, the rapid proliferation of smartphones, affordable data and universal implementation of direct carrier billing, the report stated.

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IIFL’s pre-IPO PE fund bets $51 mn on mobile game developer Nazara

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