September 04, 2023
The boardof Nazara Technologies, a listed online gaming company, has approved the issueof shares worth Rs 100 crore to firms managed by Zerodha founders Nikhil and NithinKamath, the company said in a regulatory filing on Monday.
The companyis proposing to issue 1,400,560 equity shares at a face value of Rs 4 each, forRs 714 per equity share. This will amount to Rs 99,99,99,840 and will beproportionately allotted to M/s Kamath Associates and M/s NKSquared.
This will take Nikhil Kamath's stake in the firm to 3.5 percent, up from an earlier 1 per cent.
"Gamingin India is poised for strong growth in the years to come and Nazara has builta well-diversified, profitable gaming platform well suited to take advantage ofopportunities in the years ahead. We look forward to supporting Nitish and histeam in achieving their growth aspirations for Nazara," said NikhilKamath, Partner of Kamath Associates and NKSquared.
Theseequity shares will be locked in for a period of six months from the date ofissue.
The freshfunds will be used to meet the company's capital requirements and growth plans,including for making strategic acquisitions and investments in variouscompanies.
NitishMittersain, CEO of Nazara Technologies,said, "Nikhil Kamath symbolises success in India's tech arena, and thisfundraise holds immense value for us at Nazara as we continue to build adiversified gaming platform in India. Beyond the funds raised, his investmentstands as a resounding vote of confidence in Nazara."
Analysts atbrokerage firm Prabhudas Lilladher are of the view that the funds might bedeployed to expand the company's presence in either the 'Freemium' or the'Gamified Early Learning' segments, as real money gaming (RMG) is facingregulatory hurdles. This comes after the GST Council recently announced ablanket tax of 28 per cent on online gaming.
"Whilepreferential allotment will lead to an equity dilution of 2.1 per cent, Nazaraoperates in a hyper-growth gaming industry where scalability is of primeimportance which may lead to dilution at frequent intervals at least in theinitial stages," said Dinesh Joshi – Research Analyst, Prabhudas Lilladher.
