Mobile game developer and publisher Nexters Global announced it will go public, raising money at a $ 1.9 billion enterprise value via a special purpose acquisition company (SPAC).
Nexters, which is based in Cyprus for its headquarters and has development operations in Eastern European cities such as Moscow, has struck a deal to merge with Kismet Acquisition One, a SPAC formed to take a private company public. Nexters’ biggest game is Hero Wars RPG, a role-playing game that was downloaded more than 36 million times on iOS and Android in 2020.
SPACs have become a popular way for fast-moving companies to go public without all the hassle of a traditional IPO. SPACs are set up by managers who raise money in a blind shell company, and the investors don’t know what they’re putting their money into.
We’re seeing a lot of similar transactions, such as the initial public offering of Playtika, the Israel-based company that recently had its own IPO and raised $ 1.9 billion at an $ 11 billion valuation. Huuuge also said it will raise $ 150 million in an IPO on the Polish stock exchange.
Taking advantage of the hot market, Nexters will wind up with $ 150 million in cash after the SPAC deal closes in the second quarter. It will have the ability to borrow hundreds of millions so that it will have the option of growing organically or making strategic acquisitions said Ivan Tavrin, TMT entrepreneur and executive and the founder of Kismet Capital Group, in an interview with GamesBeat.
Above: Hero Wars RPG was downloaded 36 million times in 2020.
Nexters is a top-five independent game developer in Europe, and it builds mobile, web, and social games. The company generated $ 318 million in net bookings and $ 120 million in free cash flow to equity in 2020.
Based on the expected continued growth of Hero Wars and new mobile game titles launching in 2021, net bookings are projected to grow to $ 562 million in 2023, after platform fees.
Nexters founders Andrey Fadeev and Boris Gertsovsky and existing shareholders of Nexters – including Igor Bukhman and Dmitrii Bukhman of Playrix – will roll 92% of their holdings into the combined company and agree to a 12-month lock-up (where they won’t sell their shares for a year). Fadeev and Gertsovsky will continue to run the company.
“We are growing organically, and we want to continue growing organically,” Fadeev said in an interview with GamesBeat. “W are launching three more games this year, including one that is a casual game in the farming genre with adventures and expeditions. With this deal, we now have the currency to do deals.”
Kismet Capital Group (via an affiliate) will invest $ 50 million in additional capital to ensure alignment with founders, existing shareholders, and public investors. Kismet Capital Group is based on Cyprus, and it has offices in Moscow and London.
Above: Hero Wars RPG maker Nexters generated $ 318 million in net bookings in 2020.
Kismet Acquisition One Corp. is the first SPAC formed in August, 2020, by Tavrin, who will serve on the board of Nexters after the deal is done. Nexters will be listed on Nasdaq under the ticker symbol GDEV in the second quarter.
Tavrin founded UTH Russia, one of the largest independent media companies in the country, and struck a joint-venture deal with Disney to air the Disney Channel in Russia. Tavrin also created Media One Holdings, which owns 35 TV stations and 55 radio stations in Russia. He was also CEO of MegaFon (the second largest mobile phone company in Russia), which raised $ 1.7 billion on the London Stock Exchange and Moscow exchange in 2012.
“The main purpose of this transaction is to do something for the employees and also create a currency for more transactions,” Tavrin said.
Based in Cyprus since 2017, Nexters was founded in 2010, and it really started to grow after launching Hero Wars in 2018. Hero Wars is a mid-core game, with hardcore gameplay in short session cycles. It is played in more than 100 countries, and it has delivered 8.5 times monthly active user growth in the past two years, and now it has six million monthly active users. In the past two years, the number of paying users also grew four times.
“The main strategy of the company was to go all mobile,” Fadeev said. We saw that RPGs became a very big genre on mobile.”
The company is planning to launch three new titles in 2021 in casual genres. Nexters plans to expand in Asian markets soon, as it believes its RPGs will be popular there.
As of 2020, 35% of the company’s net bookings came from the United States, 23% from Europe, and 19% from Asia, Tavrin said. The growth is expected to continue from 2021 to 2023. EBITDA (earnings before interest, taxes, depreciation, and amortization) is expected to come in at $ 138 million for 2021 and increase to $ 201 million by 2023.
Nexters aims to become the leading consolidator in the gaming space in Russian speaking countries, Eastern Europe, and beyond. The company has a strategic partnership with the founders of Playrix, the second-largest mobile game developer in the world by revenue.
The enterprise value of $ 1.9 billion represents 13.8 times projected 2021 and 11.6 times projected 2022 EBITDA. The company has 425 employees.
Public comments show lingering problems with California’s data privacy law
Earlier this month, the California Office of the Attorney General (CAG) held hearings across four cities where the public could offer comments and feedback to lawmakers as part of the rulemaking process for the California Consumer Privacy Act (CCPA). The hearings drew speakers from across a variety of industries, and their oral comments, as well as other written comments sent to the CAG’s office by Friday, December 6, are now available on the California Attorney General’s CCPA page.
While the hearings drew a number of concerns about the new data privacy law, which goes into effect January 1, four core issues emerged.
1. Crucial CCPA terms aren’t clearly defined
The most prominent concern that came out of the hearings was that terms central to the CCPA are unclear, making it difficult for companies to feel fully confident they are in compliance. At the San Francisco hearing alone, speakers said the definitions of personal information (PI) and service provider are unclear, as is what constitutes a sell. Speakers at the Los Angeles hearing made similar comments, adding that other terms like “business,” “reasonable security measures,” and “secure” transmissions of personal information were also unclear.
A common refrain was that the CCPA’s language was too vague or broad and overreaching. As a consequence, organizations have found key sections of the CCPA difficult to operationalize. They worry that the ambiguity of these terms could result in significant unintended consequences. For example, some argued that the broad definitions of PI and business may extend the reach of the CCPA to businesses that the AG likely had no intention of regulating, like small operations that serve fewer than 50,000 California customers but run high-traffic websites using cookies.
2. It’s unclear how CCPA’s scope effects other industry-specific regulation
Several commentators expressed confusion over the CCPA’s scope as it applies to companies that are already subject to industry-specific privacy legislation. At the San Francisco hearing, one speaker, representing a San Francisco credit union, indicated that the Gramm-Leach-Bliley Act (GLBA) and California Financial Information Privacy Act have definitions of PI that differ from the CCPA. She noted, though, that while the CCPA spells out exemptions to PI collected under the GLBA, inconsistencies in the definition of PI between laws have resulted in multiple interpretations about how the CCPA applies to data credit unions collect. Similar confusion may surround other regulations like HIPAA. At the Sacramento hearing, a speaker asked for clarification on how de-identification under the CCPA differs from de-identification under HIPAA, and how any de-identified data exempt from HIPAA should be handled by the CCPA.
3. Smaller organizations will have trouble meeting the January 1 deadline
Given the extensive scope of the CCPA, it’s no surprise that small and medium businesses have expressed concerns about the law’s reach and implications. Some organizations have said publicly that they’ll have substantial difficulty meeting the January 1 compliance deadline. At the San Francisco hearing, two speakers requested the compliance deadline be moved to 2022 to ensure their organizations could build a robust compliance program.
4. The system for data requests could be open to abuse
Speakers at the Los Angeles and San Francisco hearings also raised concerns about the potential for abuse with the request system. For example, they said that if companies were required to take unverified opt-out requests seriously, it could invite mass bot attacks by bad actors, either online or by phone. It’s been argued elsewhere that such abuse could effectively result in data request “denial of service” style attacks against organizations as their staff and infrastructure become tied up in an effort to respond to an unanticipated flood of fake requests. While tools exist to help automate data discovery and responses to data requests, some speakers argued that a “reasonable degree of certainty” should be the standard applied to requests, as that would give businesses more bandwidth to handle the issue.
What happens now?
Now that the hearings and the public comment period have passed, the CAG may use comments to revise the current draft regulations, after which the public will have 15 days (or longer) to provide comments on the revisions. So even though the CCPA goes into effect January 1, 2020, organizations should still expect changes to the law. Stakeholders should follow the rule-making process closely while making sure to submit any concerns to the CAG during the next comment period. Enforcement of the finalized law will begin July 1, 2020; however, organizations must make good faith efforts to comply starting January 1, 2020 and can be held liable for breaches of the law after this date.
Michael Osakwe is a tech writer and Content Marketing Manager at Nightfall AI.
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