Nazara IPO Subscribed 2X in First Three Hours Of Opening

Indian mobile gaming company Nazara Technologies’ initial public offering (IPO) has opened today, with the company’s shares listed both on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The offer will close on March 19. The issue has already seen over 2X subscription with bids for 59,52,778 shares till 1 pm, as against the issue size of 29,20,997 shares.

The Nazara IPO is entirely an offer-of-sale, with existing shareholders selling shares worth INR 580 Cr. According to the draft red herring prospectus (DRHP), the IPO includes an offer for sale of up to 691,900 equity shares by promoters, 3,933,947 equity shares by investors and 339,629 equity shares by others, a total of 5.29 Mn equity shares. Bids can be made for a minimum of 13 equity shares and in multiples of 13 equity shares thereafter.

Nazara’s 5.29 Mn shares will be sold in the price band of INR 1,100-INR 1,101 representing a 16.7% stake in the company. Ahead of its IPO, the company allotted shares worth INR 261 Cr to 43 anchor investors at INR 1,101 per piece. ICICI Securities, IIFL Securities, Jefferies India and Nomura Financial Advisory and Securities (India) are the lead managers for the IPO.

Founded by Vikash Mittersain and Nitish Mittersain in 2000, Nazara is a diversified gaming and sports media platform with a presence in India and global markets such as Africa and North America. The company specialises in interactive gaming, e-sports and gamified early-learning ecosystem, and is well-known for its variety of products, including World Cricket Championship (WCC) and CarromClash (mobile games), Kiddopia (gamified early learning), Nodwin and Sportskeeda (e-sports and esports media, respectively) and Halaplay and Qunami (skill-based fantasy and trivia games). 

Nazara had first announced its IPO plans back in 2017, and after 20 years of incorporation, it is finally ready. The wheels have started moving forward and so has the process to provide an exit to WestBridge Capital, which has been on Nazara’s cap table since 2005 when it invested $3 Mn.

The private equity fund made a partial exit in 2017, which brought down its shareholdings from 60% to 21%. The IPO is estimated to dilute its shares further to 3%-4%, WestBridge Capital’s founder and MD Sandeep Singhal told us in an earlier interaction on the journey of starting up and going to an IPO.

Nazara posted revenue of INR 264 Cr in the financial year 2020, growing from INR 164 Cr in FY2019. It aims to clock a revenue of INR 450-470 Cr in FY2021, ending in March. The company intends to do so by expanding its coverage and building up distribution network capacity in emerging markets.

Besides Nazara, Indian online travel aggregator EaseMyTrip also went for an IPO this month. For the over 1.5 Cr shares on offer, the IPO received bids for 240.27 Cr equity shares, the subscription data available on exchanges showed. 

Several other Indian startups such as Zomato, Droom, PolicyBazaar, Delhivery and Grofers are also reportedly planning IPOs this year.

India’s Gaming Industry On The Rise

The Covid-19 induced lockdown last year has led to an uptick in traction for the gaming and entertainment industry. According to the Inc42 Plus’ estimates, the value of the industry went from $23.5 Bn in FY 2014 to $62 Bn in FY 2019 and further up to $90 Bn in FY 2020, catapulted by the growth in engagement during the lockdown. Meanwhile, the overall revenue in the sector is projected to grow by 6.1% in the next five years.

The Inc42 Plus report also reveals that the Indian mobile gaming market is pegged to be at $1.2 Bn by the end of 2020, ending up at the sixth position globally. India is expected to be among the top five markets for mobile gaming, with a user base of 326 Mn.