Nazara Technologies to raise Rs 410 crore from SBI Mutual Fund

Nazara Technologies currently has shareholder approval to raise up to Rs 750 crore.

Nazara Technologies said on September 7 that it has received board approval to raise Rs 410 crore from SBI Mutual Fund, the largest asset management company in India, through equity share issuance.

This move comes as the diversified gaming and sports media company looks to build a warchest for potential acquisitions to grow its existing businesses.

The company said it is proposing to issue 57.4 lakh equity shares (57,42,296 equity shares) at a price of Rs 714 per share to SBI Mutual Fund, by way of preferential issue on a private placement basis. Nazara Technologies was trading at Rs 871 on the National Stock Exchange at 1.42pm.

The funds will be invested via three schemes of SBI Mutual Fund namely SBI Multicap Fund, SBI Magnum Global Fund and SBI Technology Opportunities Fund.

SBI Multicap Fund will be investing about Rs 200 crore in return for a 3.82 percent stake, while SBI Magnum Global Fund is investing about Rs 120 crore in return for 2.29 percent stake and SBI Technology Opportunities Fund is investing the remaining Rs 90 crore in return for 1.72 percent stake, as per a stock market filing.

Overall, SBI Mutual Funds will own a 7.83% stake in one of the country's oldest gaming firms.

This fundraise comes on heels of Nazara Technologies allocating shares worth Rs 100 crore to Zerodha co-founder Nikhil Kamath. Nazara Technologies currently has shareholder approval to raise up to Rs 750 crore. The firm had previously said it intends to raise this capital through qualified institutional placements, preferential allotment, or a combination of both.

Nazara Technologies said it plans to use the capital raised to invest in its funding requirements and growth objectives, including making strategic acquisitions and investments to strengthen its existing verticals.

“Making India the gaming nation of the world has been a long-pursued dream for all of us at Nazara. India’s largest domestic mutual fund investing in Nazara is an important milestone for us in this two decade long journey. We are very excited to welcome SBI Mutual Fund as our investor" said CEO Nitish Mittersain.

In an interview to Moneycontrol earlier this week, Mittersain said they are in discussions with domestic and international investors to raise funds in a bid to capitalise on the country's rising potential as a global gaming hub.

"Nazara is already well-capitalised today. It's not that we are raising capital out of desperation or urgency. It's something we want to do because we think the timing is good and therefore, what is equally important is the quality of the investor" Mittersain said.

Nazara Technologies currently operates in three key sectors - gaming (World Cricket Championship, Kiddopia, Animal Jam, Classic Rummy etc), esports (Nodwin Gaming, Sportskeeda) and advertising (Datawrkz).

A big focus area for the firm is growing its portfolio of gaming IPs through acquisitions in the future.

“We are very keen to build it on a larger scale, acquire more popular IPs, build it globally as well as go deeper into India with it. You should see a lot more activity there” Mittersain said.

Apart from gaming studios, the firm also plans to shop for gaming-focused adtech companies, programmatic adtech firms, and media buying or media planning agencies to expand its presence in developed markets, Mittersain said in an interview to Moneycontrol in July 2023.

"We are not looking at launching a new vertical but instead, focusing on going deeper into each of our segments, making the business healthier and stronger with better cash flows and doing M&A that makes our verticals bigger" he said.

The country’s first publicly listed gaming company is also actively looking at game publishing tie-ups such as their recent partnership with Israel-based Snax Games, Mittersain said.

India's overall online gaming industry revenues reached $2.6 billion in FY22 and is expected to expand at a compound annual growth rate of 27 percent to $8.6 billion in FY27, according to a report by Lumikai, a gaming and interactive media-focused venture fund.