Nazara Tech to raise Rs 100 crore from Zerodha’s Nikhil Kamath; shares soar 12%

Shares of Nazara Technologies jumped over 12% to hit a 52-week high of Rs 854 on the NSE on Monday after the company approved preferential allotment of equity shares to Kamath Associates and NKSquared, the companies in which Zerodha Co-founder Nikhil Kamath is a partner.

The diversified gaming and sports media platform which will be raising up to Rs 100 crores from the transaction has proposed to issue over 14 lakh equity shares at a price of Rs 714 per equity share. The company said that it will be utilising the funds towards meeting its funding requirements and growth objectives including for making strategic acquisitions and investments in various companies or entities.

The equity share aggregate to Rs 9,99,999,840 will be issued proportionately to Kamath Associates NKSquared, the exchange filing said.


Nitish Mittersain, CEO of Nazara Technologies said, "Nikhil Kamath symbolized success in India's tech arena, and this fundraise holds immense value for us at Nazara as we continue to build a diversified gaming platform in India. Beyond the funds raised, his investments and as a resounding vote of confidence in Nazara".

Commenting on the investment in Nazara, Kamath said, "Gaming in India is poised for strong growth in the years to come and Nazara has built a well-diversified, profitable gaming platform well suited to take advantage of opportunities in the years ahead. We look forward to supporting Nitish and his team in achieving their growth aspirations for Nazara”.

As per the Securities and Exchange Board of India (Sebi) regulations, these equity shares will be locked in for a period of 6 months from the date of issue.

Jinesh Joshi, Research Analyst, Prabhudas Lilladher said that the preferential allotment will lead to an equity dilution of 2.1%. Joshi said that since Nazara operated in a hyper-growth gaming industry where scalability is of prime importance, there could be frequent dilution in stake in the initial stages.

"We believe the funds might be deployed to expand presence in either Freemium or Gamified Early Learning segment as Real Money Gaming is facing regulatory hurdles post levy of 28% GST on full bet value whereas ESports business is well-funded post recent fundraise of Rs 2 billion," Joshi added while maintaining a positive bias on the stock and retaining a buy with a target price of Rs 834.

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