Nazara Technologies, a leading name in the Indian gaming industry, has raised its stake in its subsidiary, Absolute Sports, by acquiring an additional 10.26% equity for INR 72.73 crore. This move increases Nazara’s total holding in Absolute Sports, the parent company of Sportskeeda, to 81.94%. The transaction is the first tranche under a Share Purchase Agreement (SPA) signed in September with the founding shareholders Porush Jain and Srinivas Cuddapah. Nazara’s aggressive acquisition spree reflects its commitment to strengthening its position in the global gaming and sports ecosystem. This strategic investment comes amid Nazara’s plans to expand its portfolio and bolster its financial performance.
The Nazara Model: Products, Revenue, and Vision
Nazara Technologies operates across gaming, esports, and ad-tech, with a diversified revenue model that includes mobile games, esports tournaments, and ad-driven platforms. The company’s flagship subsidiaries include NODWIN Gaming, Nextwave Multimedia, and Absolute Sports. These entities cater to various markets, from casual gaming to professional esports, ensuring steady revenue streams.
Absolute Sports, through Sportskeeda, delivers sports content and analysis, targeting audiences in India and North America. Sportskeeda’s consistent ranking among the top 10 US sports news websites highlights its global appeal. With a focus on high-quality content and engagement, Absolute Sports has recorded a 22% revenue growth and an 18% EBITDA rise in H1 FY25.
Nazara’s founders, Nitish Mittersain and Manish Agarwal, envisioned a global gaming empire rooted in India’s unique market dynamics. Their acquisition strategy aligns with this vision, enabling the company to leverage synergies across its portfolio.
Details of the Investment
- Transaction Highlights:
- Nazara acquired 21,830 equity shares of INR 1 each, representing 10.26% of Absolute Sports.
- The purchase, valued at INR 72.73 crore, is part of a larger agreement to acquire 19.35% stake for INR 145.47 crore.
- The remaining shares under this agreement will be acquired in the second tranche.
- Strategic Importance:
- This acquisition boosts Nazara’s ownership in Absolute Sports to 81.94%, enhancing its control over the subsidiary.
- The move aligns with Nazara’s strategy to focus on high-growth subsidiaries and drive overall profitability.
Absolute Sports: Background and Growth
Absolute Sports, the parent of Sportskeeda, was co-founded by Porush Jain and Srinivas Cuddapah. Sportskeeda’s journey from a niche sports blog to a global content powerhouse is a testament to its founders’ vision and execution. The platform’s expansion into the US market, combined with its strong performance in India, underscores its dual-market strategy.
Despite a temporary dip in traffic for its Pro Football Network during the NFL season, Sportskeeda’s overall performance remains robust. The platform’s consistent delivery of engaging content has solidified its position in the competitive sports media space.
Nazara’s Broader Acquisition Strategy
Nazara’s recent acquisitions span gaming, esports, and ed-tech:
- Increased its stake in Nextwave Multimedia by 3% for INR 2.3 crore, bringing its total holding to 74.88%.
- Plans to invest in Funky Monkeys (kids’ play centers) and LearnTube.ai (ed-tech).
- Earlier acquisitions include UK-based Fusebox Games and India’s Moonshine Technology (Pokerbaazi’s parent company).
To fund these expansions, Nazara Technologies raised INR 855 crore via preferential issues from SBI Mutual Fund and other investors. This financial backing underscores investor confidence in Nazara’s growth potential.
Financial Performance
Nazara’s Q2 FY25 results reflect mixed performance:
- Revenue: Grew 7% year-on-year to INR 318.94 crore.
- Net Profit: Declined 33% year-on-year to INR 16.24 crore, attributed to acquisition costs and market fluctuations.
However, the company’s revenue distribution showcases its strengths:
- Gaming: 36%
- Esports: 57%
- Ad-Tech and Others: 7%
North America remains Nazara’s largest revenue market, contributing 39%, followed by India at 31% and the rest of the world at 30%.
Industry Insights and Trends
- Gaming and Esports Growth: India’s gaming market is projected to reach $8.6 billion by 2027, driven by increasing smartphone penetration and affordable internet.
- Content-Driven Engagement: Platforms like Sportskeeda demonstrate the power of localized, high-quality content in building loyal audiences.
- Strategic Acquisitions: Companies like Nazara are leveraging acquisitions to consolidate market share and diversify revenue streams.
Learnings for Startups and Entrepreneurs
- Diversification is Key: A diversified portfolio helps mitigate risks and unlocks new revenue opportunities.
- Focus on High-Growth Areas: Identifying and investing in high-performing subsidiaries can drive overall growth.
- Leverage Synergies: Acquisitions should complement existing operations to maximize efficiency and profitability.
- Global Mindset: Targeting international markets can significantly boost revenue and brand value.
- Stay Agile: Addressing short-term challenges proactively ensures long-term sustainability.
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