- The gaming firm’s cash reserve has depleted to Rs 188 crore owing to some big-ticket acquisitions
Debasis Mohapatra
Bengaluru, 20 September 2024
Gaming and media firm, Nazara Technologies is building up its coffer to aggressively chase M&A deals in the coming quarters. The latest move to raise Rs 900 crore of capital through preferential allotment route is seen as a step in that direction.
According to analysts, Nazara’s cash balance has depleted owing to its aggressive M&A deals in 2024 so far. The company now wants to strengthen its war chest to go for new acquisitions.
“As of Q1FY25 (end of June 2024), Nazara had a cash balance of Rs 1,458.3 crore. However, following a slew of acquisitions, including Paper Boat Apps, Fusebox Games, and PokerBaazi, totalling to Rs 1,270.2 crore (includes only the cash outgo figure & not equity issuance, if any) Nazara’s cash reserves depleted to Rs 1,88.1 crore. With this new fund infusion of Rs 9,00 crore, it has more gun powder to further its inorganic aspirations,” brokerage firm, Prabhudas Lilladher wrote in a note.
It, however, noted that some equity dilution would happen for the company on the back of its planned fund raise apart from recent acquisitions, which were executed as a mix of cash and share swap transactions.
“This preferential issuance of 9.4 million shares, combined with an issuance of 0.8 million shares to existing shareholders of Absolute Sports, as non-cash consideration for acquiring 9.09% stake, and the recent issuance of 2.5 million shares to the promoters of PokerBaazi, has resulted in an equity dilution of 16.6% (on existing equity base of 76.5mn),” the report noted.
This week, Nazara has announced a fund raise plan of Rs 900 crore through preferential equity allotment to a group of investors including SBI Mutual Fund, Junomoneta Finsol (an associate of Plutus Wealth), Think Investments, Discovery Investments, CaratLane founder Mithun Sacheti, Jaipur Gems CEO Siddhartha Sacheti, Cohesion Investments, Chartered Finance and Leasing, Ratnabali Investments and Aamara Capital.
This capital infusion is aimed at fuelling strategic acquisitions, funding business expansion, and strengthening the company’s ability to capitalise on new growth opportunities, the company has said.
Nazara has been very aggressive in the M&A space with a slew of acquisitions in recent quarters.
This month, Nazara announced its one of the biggest acquisitions when it acquired a 47.7% stake in Moonshine Technology, the parent company of online poker platform PokerBaazi, for Rs 832 crore via a secondary transaction. Similarly, the company acquired a further 19.35% stake in Absolute Sports, the parent company of sports news website Sportskeeda, for Rs 145.5 crore.
Earlier, the company’s management has said during Q1FY25 analyst call that the acquisitions would help the firm to accelerate towards its FY27 goal of achieving EBITDA of Rs 300 crore.
