Motorsport Games Looks to Raise Around $40M Going Public on the Nasdaq – The Esports Observer


Racing game developer, publisher, and esports ecosystem provider Motorsport Games is in the process of going public on the Nasdaq Capital Market to raise funds in the ballpark of $40M USD. According to a preliminary initial public offering (IPO) prospectus filed with the Securities and Exchange Commission (SEC), Motorsport Games will offer 2.35M Class A common stock shares at an anticipated price range between $16 to $18, which would generate gross proceeds of $37.6M to $42.3M.

Following the IPO, Motorsport Games will have a total of 16.35M shares outstanding (16,702,500 outstanding shares if all underwriter options are consumed), which would add up to a market capitalization of $262M to $294M ($267M to $301M) at the anticipated IPO price range. The underwriters of the IPO are Canaccord Genuity and The Benchmark Company.

Motorsport Games, which has offices in Miami, Orlando, Silverstone (United Kingdom), and Moscow, was formed in 2018 by international motorsport-focused media and technology company Motorsport Network as a wholly-owned subsidiary. In connection with the formation, Motorsport Games acquired a controlling stake in 704Games, the developer and publisher of the NASCAR Heat game franchise. 

Simultaneously with the acquisition of 704Games in 2018, Motorsport Games extended its license agreement with NASCAR for ten years until the end of 2029. The company also owns exclusive rights to create and organize esports leagues and events for NASCAR using its NASCAR properties.

Also in 2018, Motorsport Games acquired the leadership team of Virtually Entertained Limited, a UK-based esports specialist, and entered into an agreement to facilitate the Le Mans Esports Series as part of a joint venture with Automobile Club de l’Ouest (ACO), the organizer of the 24 Hours of Le Mans endurance race.

In 2019, the company entered into an exclusive partnership with racing game developer and publisher Codemasters granting Motorsport Network worldwide rights (excluding China) to organize and manage official DiRT Rally 2.0 World Championship and official GRiD eSport World Championship esports events.

In May of last year, Motorsport Games secured a multi-year licensing agreement ending on Dec. 31, 2026, to exclusively develop and publish the video games for the British Touring Car Championship (BTCC) racing series across console, mobile, and casual gaming channels. As part of this license, Motorsport Games has the right to create and organize esports leagues and events for the BTCC racing series.

The company, which is currently operating as a Florida LLC under the name Motorsport Gaming US LLC but will convert into a Delaware corporation and change its name to Motorsport Games Inc. before going public, will remain a Motorsport Network subsidiary. Motorsport Network is currently Motorsport Games’ only stockholder and will hold 14M common shares, representing an 85.6% stake in the company and 97% of the total voting power in Motorsport Games. Those numbers are subject to small changes since the company granted its underwriters to purchase an additional 352.5K common shares within 45 days of the IPO’s completion.

Motorsport Games intends to use the IPO net proceeds for “working capital and general corporate purposes, including product development, such as for mobile products and additional racing series, the buildout of APEX, our go-to destination for the virtual racing community, the development of our proprietary racing-focused gaming engine, which we refer to as the ‘MSG Engine,’ sales and marketing activities, capital expenditures, the possible repayment of certain outstanding debt and strategic acquisitions and investments.”

During the first nine months of 2020, Motorsport Games generated $16.1M in net revenues, up 68.2% compared to $9.57M in the same period of 2019. At the company’s anticipated IPO price range and scaling its revenues from the first three-quarters of 2020 linear to estimated full-year revenues of $21.5M, Motorsport Games’ price-to-sales ratio would be between 12.2 to 14. In total, Motorsport Games ended the first three quarters of 2020 with an $875K net profit compared to a $2.95M net loss in the same period of 2019.


Source link

Leave a Reply