IPO-bound mobile gaming company Nazara eyes Rs 3,000 crore valuation

Sep 11, 2017

MUMBAI: Mobile games developer and distributor Nazara Technologies is preparing to go public next year, making it the first gaming company in India to tap the apital markets. Nazara has mandated ICICI Securities and Edelweiss for its proposed IPO which is expected to value he Mumbai-based firm at about Rs 3,000 crore, people familiar with the matter said. Likely to raise around Rs 1,000 crore through its IPO, Nazara will facilitate the partial exit of its investor WestBridge Capital by going public after talks for a strategic sale did not materialise. The India-focused investment fund holds around 60% stake in the company and is expected to clock anywhere between 40-50 times return on its $3 million investment in the company.

Nazara, founded by Nitish Mittersain, publishes mobile games on the Chhota Bheem series and Virat Kohli, among others, and is one of the rare profitable VC-backed digital companies.

Mittersain, without commenting on the specifics of the IPO, said Nazara was looking at leveraging the boom in data usage in the country and its planned listing was a direct proxy of that. “The mobile-first digital entertainment opportunity in emerging markets reaching out to over 2 billion consumers is massive. Given that a large part of the growth in emerging markets is still ahead of us, we believe that maximum value can be created by staying independent and following through on our vision and plan of execution,“ said Mittersain, who founded Nazara in 2000 as a college student. Having been profitable since 2007, the company didn’t have the need to mop up investor capital limiting its fund-raise to only $3 million. The company’s listing is slated for the first half of 2018 if all clearnaces come in time.

Nazara clocked Rs 550 crore in revenues and a profit of Rs 66 crore at the end of financial year 2017. Present in 74 countries, it is targeting consumers in India, Africa, and key Middle Eastern countries. Mittersain said that the company will keep investing in mobile gaming startups and spot opportunities in e-sports, m-sports, as it closes acquisitions of three gaming ventures.

“Nazara is a great example of all that can be achieved when a company takes a long-term view . It has a great future given its dominance and the huge market potential of mobile gaming in India. Going public will allow the company to maximise its potential,“ said Sandeep Singhal, MD, WestBridge Capital, an investor is companies like Dr Lal Pathlabs, Vini Cosmetics and Havells. the fund first invested in Nazara in 2006.

Mobile gaming in India took off in the early 2000s when value added services (VAS) was a huge money spinner for telecom operators. But with the traction around mobile VAS diminishing, most gaming companies which were relying on these operators for distributing their content struggled or shut down. Today, these publishers use Google Play Store and Apple’s App Store for distributing their content and are bullish about the entertainment content business starting to grow rapidly with data being made available on smartphones.

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