Nazara CEO expects legal hurdles to clear before the RMG sector and is focusing on strategic growth.

The Cash Mountain Raised By Issuing New Shares to Marquee Investors

Nazara Technologies, the first Indian publicly listed gaming company, has raised a cash mountain of ₹ 315 crores which will be used for growth initiatives and strategic acquisitions aimed to expand the ‘Friends of Nazara’ network . The capital was attracted through preferential allotment of fresh shares and is subject to approval by shareholders and regulatory authorities.

Nazara Technologies “will issue 1,429,266 equity shares of face value of ₹ 4 each at a price of ₹ 2,206 per equity share (including a premium of ₹ 2,202 per equity share),” as per the regulatory filing submitted by the company on October 6. In accordance with the requirements of the Securities and Exchange Board of India (SEBI), the freshly allotted shares will remain locked for a period of one year counted from the date of issuance.

Participating investors include marquee institutional players such as Gamnat Pte Ltd, an investment company managed by GIC – the Singaporean Sovereign Wealth Fund, and Plutus Wealth Management which is based in Ahmedabad.

“The investment from such institutional investors will act as a catalyst for the Nazara flywheel to operate faster across all business segments and will result in compounding of shareholder value organically and inorganically at parent as well as at subsidiary levels,” states Manish Agarwal, CEO of Nazara, in the regulatory filing.

The ‘Friends of Nazara’’ ecosystem consists of the gaming startups across several verticals where Nazara Technologies is the majority stakeholder. These include the creator of freemium World Cricket Championships Next Wave Multimedia, the creator of gamified early learning app Kiddopia Paper Boat Apps, esports Nodwin Gaming and Sportskeeda, as well as fantasy sports app Halaplay and the recently acquired OpenPlay from the skill-based real money gaming vertical.

Nazara CEO Expects More Clarity in RMG Business

Commenting on the latest legal developments concerning the real money gaming sector in the country, Agarwal said, “In the last two months, there have been more positives than negatives (in the sector). I’m seeing that state governments are losing battles in their respective high courts and judgements are becoming sharper and clearer where there are black and white rather than grey.”

For less than a year, several high and Supreme court judgments have struck down various attempts by state governments to ban rummy and other online games. The prohibitions affected andhar bahar and blackjack online, as well as other games which are generally considered games of chance in India, but also various skill-based games including poker and fantasy sports when exchange of money was involved.

In August, the High Court in Madras struck down the Tamil Nadu RMG prohibition legislation, and the Kerala HC did the same in September for its respective government’s regulatory attempt. Earlier in July, the Supreme Court held that fantasy sports are a game of skill and as such cannot be banned.

CEO Manish Agarwal also said, “Given that the space is so large and new, there will be constant challenges but our view is that over the next four to eight quarters, things will start becoming more clear and firm.” Indeed, the state of Karnataka effected a ban on all forms of online gaming through an amendment to its Police Act of 1963 in the beginning of October.

Operators immediately started blocking access of Karnataka residents to their platforms, Nazara’s fantasy sports app Halaplay being among them. At the same time, the industry is preparing for a legal battle against the amendment bill.

“The industry will challenge this in court and seek legal recourse. We must remember that the Madras HC had recently struck down a similar act that tried to stop online skill gaming in the state,” stated Roland Landers, CEO, All India Gaming Federation (AIGF), the apex industry body for online skill gaming in India.

“The Bill appears to have been drafted without considering the various legal and constitutional positions as it includes a wide definition of ‘gaming’ and is against various judgements by the Supreme Court and High Courts,” said a statement of the Internet and Mobile Association of India (IAMAI).

Nazara’s Latest Acquisition is 100 per cent of OpenPlay

The news of the ₹ 315 cash mountain raise comes less than two months after Nazara Technologies acquired a 100 per cent stake in OpenPlay for a total price of ₹ 186.4 crore. The based in Hyderabad OpenPlay runs a multi-game skill-based gaming platform under the brand name of ‘Classic Games’ with popular titles including rummy, quiz and fantasy sports. The company is managed by the serial entrepreneur Sreeram Reddy Vanga and reaches annualized gross revenues from gaming of ₹ 80 crores and positive EBITDA margins.

According to Agarwal, “The OpenPlay acquisition offers an opportunity for Nazara to build a network of skill gaming destinations operating on one common tech platform under the proven leadership of Sreeram and his team at OpenPlay. Sreeram is a successful entrepreneur globally in online real money gaming and we are excited that he will be leading Nazara’s growth in this sector.”