Drake Star Partners: Gaming deals hit record $ 49 billion in 2021
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In the first five months of 2021, the gaming industry has already set an annual record for the number of deals in one year, with more than $ 49 billion in deals disclosed across 527 investments, acquisitions and public offerings, according to the investment bank. Drake Star Partners.
So far 2021 has got off to a good start for the gaming industry, already becoming a banner year in terms of dollar volume. Drake Star Partners said the companies announced 142 deals between January and May, worth a total of $ 21 billion for those deals. In addition, three Special Purpose Acquisition Companies (SPACs) raised $ 4.2 billion. Private gaming companies raised $ 4.2 billion in 314 minority financings from venture capitalists and strategic investors. And government procurement saw $ 5.4 billion raised in 23 initial public offerings and $ 14.2 billion raised in secondary offerings and debt financing. Drake Star Partners said 2021 has already set an annual record, although it wasn’t until May.
InvestGame said earlier this year that funding for the first quarter of 2021 exceeded $ 39 billion, topping the total of $ 33 billion for all of 2020.
“Rapid consolidation, fundings and IPOs make sense, and I don’t see it slowing down,” Michael Metzger, partner at Drake Star Partners, said in an email to GamesBeat. “It’s a reflection of how the public capital market views the gaming industry. It is the largest segment of media and continues to show strong growth. Many companies in the industry are very profitable and the industry has proven to be resistant to downturns. “
The gaming market continues to see consolidation driven by large strategic investors like Tencent, Microsoft, Embracer, EPIC, Byte Dance, EA, Stillfront and Zynga. The game also benefits from a high influx of funds into game companies, mainly in the form of early and late stage funding from VCs (Bitkraft and Maker) and strategic investors (Tencent, Sony and Warner Music).
On top of that, the craze for non-fungible tokens (NFTs) and blockchain has spread to big game fundings with companies like Animoca and Forte raising big rounds at unicorn valuations (more billion dollars).
Public markets remain attractive and see historic games IPOs (Playtika, Roblox, AppLovin, Tinybuild and Huuuge Games) and SPAC deals (JamCity, Play Studios and Nexters). More and more private equity firms are in merger and acquisition (M&A) financing (Carlyle and KKR). And strategic public investors are raising large side offers and debt financing to further stimulate mergers and acquisitions (Embracer, EA and Playtika). AppLovin raised $ 2 billion at a valuation of $ 28 billion in an IPO, while Epic Games raised $ 1 billion to $ 28 billion in private funding.
The May update analyzes the first five months of the year in terms of activity and transaction volume in market segments and in PC / Console and mobile segments.
“The great appetite of institutional investors is pushing IPOs and PSPCs, as well as secondary offerings of companies already open to provide capital for mergers and acquisitions,” Metzger said. “Private companies generally trade at a significant discount compared to public companies. Hence the motivation for private companies to go public and for public companies to acquire private companies at a lower price. [earnings before interest, taxes, depreciation, and amortization] EBITDA multiple than their trading multiple. This has allowed companies like Embracer to grow rapidly through acquisitions while increasing overall shareholder value. Several of the more recently listed companies like EG7 or Thunderful follow the same model. Tencent aims to generate at least half of its revenue in Western markets.
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