Nazara Prepares a War Chest of INR 315 Crores for Strategic Growth and Acquisitions

Nazara Technologies Ltd, India's first publicly traded gaming business, has amassed a war chest worth INR 315 crores, which it intends to employ for strategic expansion plans. These mostly consist of acquisitions aimed at expanding the ever-expanding "Friends of Nazara" network, as the firm refers to the ecosystem of gaming companies in which it owns the bulk of the share capital.

The INR 315 crores (about $ 42 million) was raised through the preferential distribution of newly issued shares to prominent institutional investors such as the Singaporean Sovereign Wealth Fund GIC via its investment business Gamnat Pte Limited and Ahmedabad-based Plutus Wealth Management.

According to the company's regulatory filing dated October 6, Nazara "would issue 1,429,266 equity shares of face value of INR 4 each at a price of INR 2,206 per equity share (including a premium of INR 2,202 per equity share)." Existing shareholders and regulatory agencies must approve the issue of new shares. The new shares will thereafter be frozen for one year from the issuance date, in accordance with the regulations of the Securities and Exchange Board of India (SEBI).

The 'Friends of Nazara' network spans four verticals: gamified early learning (via the creator of the Kidopia app Paper Boat Apps), freemium (via the creator of the World Cricket Championships, Next Wave Multimedia), esports (via Sportskeeda and Nodwin Gaming), and real money gaming (via fantasy sports app Halaplay and Nazara's latest acquisition OpenPlay with its multi-game platform Classic Games).

Clarity is Around the Corner for the RMG Sector, Says Nazara CEO

Several states have moved to outlaw fantasy sports, rummy, and roulette games, as well as any other type of internet gambling involving the electronic exchange of money, in recent months. Despite this, the majority of the bans have already been overturned by several High Courts and the Supreme Court.

The Madras High Court found the Tamil Nadu law on online casino games to be ultra vires of the Constitution in August, stating that the state government had exceeded its authority by enacting legislation that was 'excessive and disproportionate' to its goal. Similarly, the Kerala High Court rejected the state's bid to outlaw rummy and other internet games in September. In July, the country's highest court characterised fantasy sports as games of basic skill and ruled that they could not be outlawed as a result.

The most recent prohibition statute was enacted in early October as an amendment to the Karnataka Police Act of 1963, which prohibited all types of chance and skill-based gambling in the state. Operators, like Nazara's Halaplay, were instantly blocking access to their sites for Karnataka residents.

Naturally, the business is ready to challenge the modification in court. The industry will file a legal challenge and seek legal redress. They should recall that the Madras High Court previously ruled down a similar ordinance that attempted to prohibit online skill gaming in the state, according to All India Gaming Federation (AIGF) CEO Roland Landers, who represents India's main online skill gaming industry group.

Nazara’s Acquisition of OpenPlay is Still Fresh

Nazara Technologies paid INR 186.4 crore for 100% of OpenPlay's shares less than two months ago. Classic Games, a skill-based multi-game platform including fantasy sports, quizzes, rummy, and other games, is owned and operated by the Hyderabad-based firm. Under the guidance of serial entrepreneur Sreeram Reddy Vanga, the firm has generated yearly gaming sales of INR 80 crores while maintaining positive EBITDA margins.

Delta’s CFO Asked to Deny Selling Online Business to Nazara

Because of Nazara's aggressive methods, Delta Corp chief financial officer (CFO) Hardik Dhebar had to fend off several inquiries from a CNBC TV18 interviewer on whether Delta would sell its online business to Nazara.

Dhebar used the interview to disclose the company's ambitions to seek $30-40-50 million to expand its online business with a new RMG and fantasy sports platform. Finally, CFO Dhebar was unable to completely dismiss the rumours. Interestingly, Rakesh Jhunjhunwala, dubbed "India's Warren Buffet," owns a stake in both Delta and Nazara.

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