Main Highlights
- Nexters mobile game-maker is being made public in a deal, which values the firm at an enterprise value of $1,9 billion, by a special purpose acquisition company (SPAC).
- The agreement will mean a total of $132 million for Nexters and its stockholders.
- The proceeds will speed up organic as well as inorganic growth initiatives in the firm and will be deployed to fund the development of new products.
- In the first quarter of 2021, the firm estimated annual sales growth of 48 percent on the basis of a strong 15 percent increase in bookings of 113 million dollars.
Nexters mobile game maker is being made public in a deal, which values the firm at an enterprise value of $1,9 billion, by a Special Purpose Acquisition Company (SPAC). The agreement will mean a total of $132 million for Nexters and its stockholders. Approximately half will go into the firm, while Nexters’ shareholders will get the remainder.
For fast-moving firms, SPACs have become a popular solution without all the problems of a regular IPO. SPACs are created by management in a blind shell business raising money and the investors don’t know what their money is put into.
The following has an agreement with the SPAC business of Cyprus, Kismet Acquisition One, a SPAC created to take on a private company public. It has developed development activities in Eastern European cities, such as Moscow, to combine with the SPAC company. The next biggest game is Hero Wars RPG, an RPG that has been running on iOS and Android for over 120 million downloads so far. The company’s overall downloads are above 200 million. Its major objective is to provide more casual gamers with Midcore (hardcore gameplay in short cycles).
“Agreements were voted on by SPAC holders,” CEO Andrey Fadeev told GamesBeat in an interview. “And for our M&A purposes today, we have the funds. It was our desire to follow this public market and have public currency.” We’re really glad.
Kismet Trust Account, Kismet Sponsor, and (private equities investments) PIPE investors Mubadala Investment Company and VPE Capital include the shareholders who will get the cash. The billionaire Ivan Tavrin leads Kismet. A PIPE allows other private investors to enter into an agreement with SPAC.
The 132 million dollars is just a little smaller than 150% of the company’s projected dollars after the deal, but the unpredictable market and regulators make SPACS more scrutiny more difficult to pull off SPACs.
How will Nexters use the funds?
The proceeds will speed up organic as well as inorganic growth initiatives in the firm and will be deployed to fund the development of new products with the goal that more casual games will be developed, games will be launched across additional geographical lines and the first play companies will be dealt with through Nexters’ established gaming links in the gaming industry.
Next’s public listing should also assist its goal of becoming a major game consolidator for Russians, Eastern Europe, and beyond, taking advantage of the important market opportunity while using its proven value creation playbook to support other businesses and drive considerable synergies over time.
Fadiev will continue to oversee the firm, which has over 600 developers, and research and development director Boris Gertsovskiy. Fadeev, Gertsov, Igor, Igor Bukhman, Andrew Sheppard, Natasha Braginsky, and Ivan Tavrin will be on the board. The financial consultants for Kismet Acquisition One were Credit Suisse, BofA Securities, and LionTree Advisors. Also, advisers for Kismet Acquisition One were Credit Suisse and BofA Securities.
Game performance
After the first half, the firm increased its projections of financial performance better than predicted. The conduct of players continues to demonstrate favorable dynamics, with the average monthly payment reservations rising 7% at Q1 to $115. This means that the paying users spend more money.
In the first quarter of 2021, the firm estimated annual sales growth of 48 percent on the basis of a strong 15 percent increase in bookings of 113 million dollars. And the company’s expected increase in April is increasing for the year, claiming that in 2021, reservations would climb by 38%. Seven million active gamers each month are in Hero Wars.
Fadeev added that after the epidemic ends the company’s games would continue to be enjoyable. Firstly, the Hero Wars, a “forever franchise” initially published in 2016, is continuing to develop. The business sees on the other side some encouraging outcomes from new games like Chibi Island, a game of agricultural adventures.
Hero Wars teaches Chibi Island a lot and applies it not just to higher downloads, but also to enhanced revenue. Players may expand their farms in this game like in FarmVille. However, it has a major adventure aspect, since you may unlock and explore various sections of the island. This game was launched in a restricted way at the end of 2020 and is scheduled to debut completely this year.
Acquisitions
On Fadeev’s home soil in Eastern Europe, this is a significant opportunity. Fadeev and his colleagues are speaking Russian and will be able to operate more readily in the region with the game development teams, said Reinhold. You feel that Nexters will have an advantage in terms of transactions over other ambitious investors and buyers.
The Games Fund, a risk capital game company founded by Russian investment specialists, has around 5000 game developers in eastern Europe. Fadeev thinks that 1,000 of them exist in Russia and many of them are known to the managers of the gaming business through his prior affiliations.
“Translating from Russian is not extremely hard, but other people don’t understand the culture,” said chief operating officer Anton Reinhold in a GamesBeat interview. “To become a consolidator is one of our strategy points.”
Based on the initial arrangements, the agreement takes place a bit late. It took the firm some time to switch its accounting system to GAAP reporting based in the US, Fadeev added. SPACs also becoming increasingly scrutinized. They highlighted “We have overcome all the problems,” stated Fadeev. He also acknowledged Tavrin’s extensive experience in dealing with the business. “We believe in building a fantastic company and bringing a tremendous deal of wealth to our shareholders in the long run,” says Fadeev.