Opportunities Fund has acquired a minority stake in mobile game developer Nazara Technologies. The fund paid around ₹330 crore to Westbridge Capital for its stake. This is touted as the largest private investment in the gaming space in India.
As per the report, this stake sale will give Westbridge Capital a return of over 40 times compared to the price at which it invested. According to a person who is aware of the deal, the stake of Westbridge will now drop to a little over 30% from about 55%.
Prashasta Seth, CEO of IIFL Asset Management, said:
The good thing about Nazara is that they are not a gaming developer which drives most of the revenues from one hit release, but a diversified publisher. And they are also diversified across global markets and not just India. This makes the predictability of cash flows much stronger. Right now, they generate most of the revenues from subscription revenues. But now we see an opportunity to increase revenues through in app purchases in games.
Nazara Technologies was founded in 2000 by Nitish Mittersain. It is one of the rare highly-profitable companies in India’s digital market. The company could be valued at between ₹3,000 crore and ₹3,500 crore in its IPO, which is expected to take place by middle of 2018.
The company is reportedly planning to finish the listing process by the end of March 2018 and is expecting a valuation of 30-35 times projected profit after tax (PAT) of ₹100 crore in FY19.
Nazara Technologies, which has been profitable since 2007, is most popular for its ‘Chhota Bheem’ game. It had gross customer billings of over ₹550 crore with PAT of ₹66 crore, according to the company’s report.
The mobile gaming company has expanded to 74 countries as publisher, diversifying its revenues across Africa and the Middle East as well. Its IPO plan comes at a time when it is looking to expand from its focus on casual mobile gaming to become a broader ecosystem player.
According to a FICCI-KPMG report, India’s mobile gaming market is expected to expand from $200 million in 2016 to $3 billion in 2019.