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NEW DELHI : Billionaire investor Rakesh Jhunjunwala-backed Nazara Technologies Ltd will become the first Indian gaming company to go public, with its initial public offering (IPO) set for launch on Wednesday. The company has fixed a price band of ,100-1,101 per share for the 583 crore share sale.

The IPO will raise the company’s profile globally and open the doors to more investment opportunities in future, the company’s management said in an interaction with Mint.

“Having a gaming IPO opens a lot of investor interest in this space. India is still under-penetrated from a gaming point of view. Knowing there is a listed stock that can be tracked across the world augurs well for the gaming industry," said Manish Agarwal, chief executive, Nazara Technologies.

Jhunjhunwala, the company’s core promoter and investor with an 11.51% stake, will remain on the board of directors and provide mentorship.

The IPO is a pure secondary sale of shares by existing shareholders, so the company will not be raising fresh cash for its business through the IPO. Nazara has cash reserves of 300 crore.

“There are no cash proceeds as this is an offer for sale. We have sufficient cash reserves for near term needs. All our companies were able to grow on their own steam, so we did not feel the need to raise additional cash immediately," said Nitish Mittersain, MD and founder, Nazara Technologies. “If we require cash in future, we will come back to the market."

Unlike the many highly-valuable gaming firms created in India in the past few years, Nazara was incorporated over two decades ago in 1999.

“During early years, we had to focus on finding models we could monetize. That shaped our DNA which is to run a lean and mean business, cash flow-driven business and not to chase vanity metrics," Mittersain said, adding that it has become very easy for a startup to raise capital currently.

Nazara’s core business includes eSports, gamified learning, freemium gaming and telco-based subscription.

Gamified learning platform Kiddopia, which is hugely popular in the US, accounted for 39.24% of total revenue in the first half of FY21. The eSports business led by Nodwin Gaming and Sportskeeda generated 31.7%.

“We are one of the top five global eSports firms. In India, we have 80% market share in terms of tournaments. We are going to expand into Africa and Middle East as we see opportunity there," said Agarwal.

Nazara recently entered into a strategic partnership with Krafton, the creators of PUBG Mobile game and one of the pioneers of eSports gaming in South Korea.

Telco-based subscription, which includes a bunch of mobile games offered as value added services to telecom subscribers, comprised 21% of revenue. The contribution of telco revenue has plunged from 89% in FY18.

Despite the recent growth in real money and skill gaming in India, Nazara does not have any growth-focused plans for the segment due to a lack of regulatory clarity. Several states have called for a ban on skill gaming, likening them to online gambling.

Though covid has been a key growth driver for the overall gaming industry, for Nazara, its impact has been mixed, given the company’s diverse portfolio.

According to Mittersain, the company grew as the pandemic accelerated uptake of gaming. However, the overall impact has been two-fold. “Multiple of our businesses benefited during that period. At the same time, live sports were completely altered, as a result eSports business suffered. However, due to our diversified portfolio, we saw a neutral to slightly positive impact of covid on our financial numbers," Mittersain said.

Acquisitions have been a key growth strategy for the company. Most of its top brands such as Nodwin, Sportskeeda and Kiddopia were acquired in the past five years.

“If you see our past record, we have very actively supported the local gaming system. Inorganic acquisitions are part of our growth strategy and we will continue to evaluate new opportunities to increase the network," added Agarwal.

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