Nazara Tech gets board nod to raise Rs 250 crore; buys 10.7% stake in Kofluence

Nazara Tech gets board nod to raise Rs 250 crore; buys 10.7% stake in Kofluence

Nazara Technologies said on January 17 that it has received board approval to raise Rs 250 crore from a clutch of new and existing investors, including Zerodha co-founder Nikhil Kamath, Plutus Wealth, and ICICI Prudential Mutual Fund.

This marks the completion of its targeted fundraise of Rs 750 crore announced last year. The company had earlier raised funds from SBI Mutual Fund and Zerodha co-founder Nikhil Kamath in September 2023.

The financing comes as the diversified gaming and sports media company looks to build a warchest for potential acquisitions to grow its existing businesses.

Along with the fundraise announcement, Nazara said it is buying 10.77 percent stake in influencer marketing platform Kofluence from the latter's shareholders for a total consideration of up to Rs 32.41 crore. Kofluence co-founder and CEO Sreeram Reddy Vanga had previously sold his earlier venture OpenPlay to Nazara Technologies for Rs 186.4 crore in August 2021.

Nazara Technologies and Kofluence plan to launch an influencer-driven game discovery platform, wherein influencers will promote Nazara's games across various social media platforms.

This development comes on heels of the firm launching its publishing unit, Nazara Publishing, in a bid to capitalise on India's rising potential as a global gaming hub.

In December, Nazara said its publishing unit has selected an initial set of five games ranging across various genres from four Indian game studios. Nazara Publishing plans to launch up to 20 games across mobile, web3, virtual reality (VR) and personal computer (PC) over the next 12-18 months and invest between Rs 1 crore and  Rs 3 crore a game.

The transaction

Nazara Technologies, the country's first publicly listed gaming company, said it is proposing to issue 28.66 lakh shares (28,66,474 shares) at an issue price of Rs 872.15 per share. Nazara Technologies was trading at Rs 936.75 on the National Stock Exchange at the day's close on January 17.

Zerodha co-founder Nikhil Kamath's two firms - Kamath Associates and NKSquared - will invest Rs 50 crore apiece and their combined stake will increase from 2.53 percent to 3.93 percent. Plutus Wealth is also investing Rs 50 crore to increase its stake from 6.14 percent to 6.63 percent.

ICICI Prudential Mutual Fund is investing Rs 75 crore through three of its schemes - ICICI Prudential Technology Fund (Rs 40 crore), ICICI Prudential Flexicap Fund (Rs 22 crore), and ICICI Prudential ESG Fund (Rs 13 crore) - with the combined stake increasing from 1.75 percent to 2.81 percent.

"We are immensely grateful for the robust support from our esteemed investors, such as Nikhil Kamath, ICICI Prudential MF, and Plutus Wealth, who have substantially increased their investments in Nazara. This not only reinforces their belief in our strategic vision and direction but also significantly strengthens our financial standing" Nazara founder Nitish Mittersain said in a statement.

"With our consolidated cash reserves now exceeding Rs 1,500 crores, Nazara is exceptionally well-positioned to pursue both organic growth and strategic acquisitions" he said.

In an interview to Moneycontrol in September 2023, Mittersain had said they were in discussions with domestic and international investors to raise funds in a bid to capitalise on the country's rising potential as a global gaming hub.

"Nazara is already well-capitalised today. It's not that we are raising capital out of desperation or urgency. It's something we want to do because we think the timing is good and therefore, what is equally important is the quality of the investor" Mittersain said.

Nazara Technologies said it will use the fresh funds to invest in the company's funding requirements and growth objectives including for making strategic acquisitions and general corporate purposes.

The Kofluence deal

Nazara Technologies said it is buying 10.77 percent stake from certain existing investors of Kofluence including Nikhil Kamath's NKSquared, Udaan co-founder Sujeet Kumar, Koo co-founder Aprameya Radhakrishna, investment firms QED Innovation Labs and LV Angel Fund, and Kofluence co-founder Ritesh Ujjwal through a share swap transaction.

The company said it is proposing to issue 3.71 lakh shares (3,71,637 shares) at a price of Rs 872.15 per share that aggregates to Rs 32.41 crore.

Started by Vanga and Ritesh Ujjwal, Kofluence is an influencer-led marketing technology platform with over 600,000 creators across Instagram, YouTube, Facebook, LinkedIn, and Twitter representing over 20 languages. It claims to have worked with over 500 marquee clients across more than 20 sectors.

Nazara said the new influencer-driven game discovery platform will enhance Nazara's game visibility, enable targeted marketing, and allow for direct performance feedback, helping them penetrate diverse market segments. Influencers can tailor their content to match their audience's preferences, thereby "creating buzz" around new releases and driving downloads.

"Kofluence is pioneering creator economy led platforms and Sreeram's extensive gaming experience is invaluable to create a pioneering influencer led game discovery platform and community. Our goal is to create an environment where gaming collaborates with the creativity of influencers, enriching the gaming experience for a global audience" Mittersain said.

Vanga said "This partnership is not only expanding Nazara's game reach but also reshaping game marketing dynamics, bringing every creator and user into an expansive and captivating gaming narrative"

Nazara Technologies currently operates in three key sectors - gaming (World Cricket Championship, Kiddopia, Animal Jam, Classic Rummy etc), esports (Nodwin Gaming, Sportskeeda) and advertising (Datawrkz).

A big focus area for the firm is growing its portfolio of gaming IPs through acquisitions in the future, founder Nitish Mittersain told Moneycontrol in an earlier interview.

Apart from gaming studios, Nazara Technologies also plans to shop for gaming-focused adtech companies, programmatic adtech firms, and media buying or media planning agencies to expand its presence in developed markets, Mittersain said at the time.

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