Nazara Technologies Ltd said on Tuesday it has agreed to buy 55% stake in Datawrkz as the Mumbai-listed gaming firm seeks to build its ad tech vertical.
"Ad tech is now a segment for us from a value creation point of view and through organic and inorganic growth we will build this segment," Manish Agarwal, CEO, Nazara, told VCCircle in an interaction.
The deal with Datawrkz was built on Nazara's broader philosophy of investing in companies that are being built to last and not built to sell, he added.
There will be no management change in Datawrkz as part of the transaction.
In a separate statement, Nazara said that the transaction valued Datawrkz at Rs 225 crore (around $30 million). Nazara will initially acquire 33% stake in the first tranche by April this year for Rs 60 crore.
Of the total amount, Rs 35 crore will be paid in cash and the balance Rs 25 crore will be paid either in cash or swap of shares. Nazara reserves an option to acquire an additional 22% in the second tranche that is expected to close in January-March next year, the statement added.
Datawrkz was founded in 2013 by Senthil Govindan, IIM Ahmedabad alumnus, and it has offices in the US, India and Singapore. The company, bootstrapped so far, functions as an 'independent trading desk' to power digital media strategy, planning and execution.
Datawrkz had posted a combined revenue of Rs 90.7 crore (around 12.1 million) and earnings before interest, taxes, depreciation, and amortization (EBIDTA) margin of 12% in calendar year 2021, the statement noted.
In 2020, its revenue was at Rs 37 crore, said Agarwal. The company had around 70% of its revenue coming from the US during the period and the US is expected to stay as the largest market.
The statement noted that there is an increasing symbiotic relationship between gaming companies and ad tech companies globally as a combination of the two will be value accretive for both businesses.
"With this transaction, Datawrkz aims to establish itself as a key player in gaming, covering both demand and supply side offerings for the gaming ecosystem in the US and India," it added.
Nazara has made multiple acquisitions and investments over the years.
Last year, Nazara acquired a stake in Rusk Media Ltd for about Rs 2 crore and bought skill-based gaming company OpenPlay for Rs 186.4 crore.
Earlier, it backed pre-school edutainment app Kiddopia and acquired a majority stake in video game developer, Sports Unity and multi sports content platform, Sportskeeda. It also acquired eSports platform NODWIN gaming in 2018.
Founded in 2000 by Nitish Mittersain, Nazara had refiled for its initial public offering (IPO) in January last year and then got listed.