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Nazara has Prepared a War Chest of ₹ 315 Crores for Strategic Growth and Acquisitions

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Nazara Technologies has been busy preparing for further growth as the online skill gaming industry is gaining more judicial recognition.

The ‘Friends of Nazara’ Network is to Expand Once Again

India’s first gaming company that went publicly listed Nazara Technologies Ltd has set up a war chest containing ₹ 315 crores and is planning to use it for strategic growth initiatives. These include mainly acquisitions aimed at the expansion of the ever growing “Friends of Navara’ network, as the company calls the ecosystem of gaming startups where it holds the majority of the share capital.

The ₹ 315 crores (roughly $ 42 million) was attracted through the preferential allocation of freshly issued shares to marquee institutional investors such as the Singaporean Sovereign Wealth Fund GIC through the managed by it investment firm Gamnat Pte Limited and Ahmedabad-based Plutus Wealth Management.

Nazara “will issue 1,429,266 equity shares of face value of ₹ 4 each at a price of ₹ 2,206 per equity share (including a premium of ₹ 2,202 per equity share),” states the company’s regulatory filing dated October 6. The issuance of fresh shares is subject to approval by existing shareholders and regulatory bodies. Then, conforming to the requirements of the Securities and Exchange Board of India (SEBI), the new shares will stay locked for one year after the issuance date.

“The investment from such institutional investors will act as a catalyst for the Nazara flywheel to operate faster across all business segments and will result in compounding of shareholder value organically and inorganically at parent as well as at subsidiary levels,” said Nazara’s CEO Manish Agarwal in the regulatory filing.

The ‘Friends of Nazara’ network is spread across four verticals including gamified early learning (through the creator of the Kidopia app Paper Boat Apps),  freemium (through the World Cricket Championships’ creator  Next Wave Multimedia), esports (through Sportskeeda and Nodwin Gaming), and real money gaming (through fantasy sports app Halaplay and Nazara’s latest acquisition OpenPlay with its multi-game platform Classic Games).

Clarity is Around the Corner for the RMG Sector, Says Nazara CEO

Within the last few months several states have attempted to ban fantasy sports, rummy and roulette games, as well as any other forms of online gaming involving electronic exchange of money. Nevertheless, most of the prohibitions have already been struck down by various High Courts and the Supreme Court.

In August, the Madras High Court declared the Tamil Nadu regulation against online casino games as ultra vires of the Constitution saying that the state government had gone beyond its powers when adopting the legislation that was ‘excessive and disproportionate’ to its object. Similarly, in September, the Kerala High Court struck down the state’s attempt at banning rummy and other online games. In July, the apex court of the country defined fantasy sports as games of mere skill and said they cannot be banned because of this.

The latest prohibition act came in early October as an amendment to the Karnataka Police Act of 1963, banning all forms of chance and skill-based gaming in the state. Operators, including Nazara’s Halaplay, started to immediately block access to their platforms for residents of Karnataka.

“In the last two months, there have been more positives than negatives (in the sector). I’m seeing that state governments are losing battles in their respective high courts and judgements are becoming sharper and clearer where there are black and white rather than grey,” was Nazara’s CEO comments on these events. “Given that the space is so large and new, there will be constant challenges but our view is that over the next four to eight quarters, things will start becoming more clear and firm,” Manish Agarwal continued.

Naturally, the industry is preparing to fight the amendment in the appropriate courts. “The industry will challenge this in court and seek legal recourse. We must remember that the Madras HC had recently struck down a similar act that tried to stop online skill gaming in the state,” said All India Gaming Federation (AIGF)’s CEO Roland Landers, as representative of India’s principal online skill gaming industry body.

“The Bill appears to have been drafted without considering the various legal and constitutional positions as it includes a wide definition of ‘gaming’ and is against various judgements by the Supreme Court and High Courts,” said the Internet and Mobile Association of India (IAMAI).

Nazara’s Acquisition of OpenPlay is Still Fresh

Less than two months ago Nazara Technologies paid ₹ 186.4 crore for 100 per cent of the shares of OpenPlay. The Hyderabad-based startup owns and operates the skill-based multi-game platform Classic Games that features fantasy sports, quiz, rummy and other titles. The company has been grossing ₹ 80 crores of annualized gaming revenues and has been operating on positive EBITDA margins under the leadership of serial entrepreneur Sreeram Reddy Vanga.

“The OpenPlay acquisition offers an opportunity for Nazara to build a network of skill gaming destinations operating on one common tech platform under the proven leadership of Sreeram and his team at OpenPlay. Sreeram is a successful entrepreneur globally in online real money gaming and we are excited that he will be leading Nazara’s growth in this sector,” said Agarwal commenting on the news.

Delta’s CFO Asked to Deny Selling Online Business to Nazara

Nazara’s aggressive tactics resulted in Hardik Dhebar, chief financial officer (CFO) of Delta Corp, having to fend off multiple questions from a CNBC TV18 interviewer whether Delta would sell its online business to Nazara.

Dhebar was using the interview to announce the group’s plans to raise $ 30-40-50 million to grow its online division with a new RMG and fantasy sports platform. At the end, CFO Dhebar was not able to fully deny the speculation. Interestingly, the so-called India’s Warren Buffet Rakesh Jhunjhunwala has a stake in both Delta and Nazara companies.


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