Plutus, Axana to buy another 26% in Nazara Technologies via open offer

Axana Estates and Plutus Wealth Management along with Junomoneta Finsol have made an open offer to acquire up to 26 per cent stake in Nazara Technologies, a gaming company. The open offer was triggered as Nazara on Monday announced that the company has received board approval to raise Rs 495 crore from Plutus Wealth Management's founder and managing partner Arpit Khandelwal and Mithun Sacheti, co-founder of CaratLane. The two will acquire 5.4 per cent stake in the company through Axana Estates via a preferential issue of shares. Axana Estates’ designated partners include Khandelwal and Sacheti.

 

Khandelwal and his firm Plutus Wealth Management held about 20.07 per cent equity in Nazara prior to the preferential issue of shares. With the issue, the combined stake of Axana Estates, Plutus Wealth Management, and Khandelwal would rise to 25.47 per cent, which has triggered the open offer. Junomoneta Finsol, which is a Plutus Wealth Management entity, already owns 1.84 per cent in Nazara.

 

The open offer is priced at Rs 990 per share, which is a 7.2 per cent discount to the current market price of Nazara. The offer targets acquisition of 2.41 crore shares, valued at approximately Rs 2,382 crore.

 

Nazara's stock price surged 5.47 per cent during intraday on Monday and touched Rs 1,079.7 per share. The stock closed at Rs 1,066.8 per share, up 4.2 per cent on the BSE. 

 

With the transaction, the promoter holding of the company will change, with Sacheti and Plutus Wealth Management becoming the main promoters. However, the company will be run by Nitish Mittersain, managing director and chief executive officer (MD & CEO), Nazara Technologies.

 

Asked about the need for raising funds, Mittersain said: “Some of our merger and acquisition (M&A) tables have been working very well. Right now, there is an opportunity where the global assets we want to buy are available at very attractive prices. We don't want to miss that opportunity.”

 

Mittersain’s shareholding in the company would come down to about 8.5 per cent with the latest capital infusion.

 

Nazara on Monday also acquired two game intellectual property (IP) rights from Spanish video game developer ZeptoLab for Rs 67 crore, enabling the company to publish the games under the “Nazara Publishing” banner.

 

The total amount is aimed to be utilised for Nazara’s organic and inorganic growth, and expansion into new markets.

 

Asked if there would be any issue since the promoter shareholding would change, Mittersain said: “Our original promoters, which is me and my family, were highly diluted even when Westbridge came in 2005. At that time, our stake had come down to 35 per cent and remained the same for a long time between 2005 and 2020, and when Westbridge exited, they owned 60-65 per cent of the company. We have been working with a large shareholder for a long time and it doesn’t bother or change anything.”

 

In November last year, Nazara raised Rs 855 crore via a preferential issue, which saw participation from SBI Innovative Opportunities Fund, Junomoneta Finsol, and Think India Opportunities Master Fund LP, among others.

 

The company has recently been on an expansion spree as it has been pushing inorganic growth via acquisitions, and is looking to enter international markets.

 

In September, the company had announced plans to raise as much as Rs 900 crore to fuel strategic acquisitions and fund business expansion.