Zerodha's Kamath brothers to invest Rs 100 crore in Nazara Technologies

The board of Nazara Technologies, a listed online gaming company, has approved the issue of shares worth Rs 100 crore to firms managed by Zerodha founders Nikhil and Nithin Kamath, the company said in a regulatory filing on Monday.

The company is proposing to issue 1,400,560 equity shares at a face value of Rs 4 each, for Rs 714 per equity share.

This will amount to Rs 99,99,99,840 and will be proportionately allotted to M/s Kamath Associates and M/s NKSquared.

This will take Nikhil Kamath's stake in the firm to 3.5 per cent, up from an earlier 1 per cent.

"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," said Nikhil Kamath, Partner of Kamath Associates and NKSquared.

These equity shares will be locked in for a period of six months from the date of issue.

The fresh funds will be used to meet the company's capital requirements and growth plans, including for making strategic acquisitions and investments in various companies.

Nitish Mittersain, CEO of Nazara Technologies, said, "Nikhil Kamath symbolises 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 investment stands as a resounding vote of confidence in Nazara."

Analysts at brokerage firm Prabhudas Lilladher are of the view that the funds might be deployed to expand the company's presence in either the 'Freemium' or the 'Gamified Early Learning' segments, as real money gaming (RMG) is facing regulatory hurdles.

This comes after the GST Council recently announced a blanket tax of 28 per cent on online gaming.

"While preferential allotment will lead to an equity dilution of 2.1 per cent, Nazara operates in a hyper-growth gaming industry where scalability is of prime importance which may lead to dilution at frequent intervals at least in the initial stages," said Dinesh Joshi   Research Analyst, Prabhudas Lilladher.