IPO Report: This esports company is gearing up to be the first Pakistani entity to list on Nasdaq

Gamer Pakistan Inc., an esports company, is poised to become the first Pakistani entity to list on Nasdaq with its initial public offering expected to price later Thursday.

The company will offer 1.7 million shares priced at $4 to $5 a pop, to raise $8.5 million at the top of that range. With 25.6 million shares expected to be outstanding once the deal is completed, the company would have a valuation of $128 million.

The company
GPAK,

has applied to be listed on Nasdaq under the ticker “GPAK.”

WestPark Capital Inc. is the sole underwriter on the deal. The New York-based investment bank specializes in deals involving emerging growth companies in small and micro-cap markets and has an office in Hong Kong serving Asian clients.

“We are a development-stage interactive esports event promotion and product marketing company, founded in November 2021,” the company said in its filing documents with the Securities and Exchange Commission.

Esports are popular in Pakistan, the fifth most populous country in the world with about 231 million inhabitants. It’s a young population with a median age of 22.8 years and with about 65% of the total under the age of 30.

It’s also a market in which mobile phone subscriptions have grown at a stellar pace to cover about 80% of the population in 2020 compared with 0.2% in 2000, according to the company’s prospectus.

About 36.8 million people in Pakistan are estimated to have played video games in 2022 and that number is expected to grow to 50.9 million by 2026. Video-game industry revenue is expected to have totaled about $208.7 million in 2022 and to grow to $227.4 million by 2026.

Esports are typically played on mobile devices, as well as consoles and PCs and are enjoyed by amateur and professional teams. They often take the form of multiplayer video games involving real-time strategy and competition at well-attended tournaments.

“Our initial focus is on creating college, inter- university and professional esports events for both men’s and women’s teams, particularly esports opportunities with colleges and universities in Pakistan,” says the prospectus.

There are about 1.96 million students in Pakistani universities and esports are recognized as a sport.

For now, Gamer Pakistan plans to focus on opportunities involving colleges and universities, but over time it will expand to other markets and even consider live sports.

“We will endeavor to integrate competitive events that include our teams and leagues with regional and global teams and leagues sponsored by others, including companies formed by certain of our stockholders to promote sports, including esports, in other countries,” says the prospectus.

The company will commercialize the business by selling ads and sponsorships on live and delayed streaming of tournaments. Sponsorship revenues are the main source of esports revenues and accounted for nearly 60% of them in 2022, according to the prospectus. Other income sources include media rights, publisher fees, merchandise and tickets, digital and streaming.

Gamer Pakistan conducts its operations through K2 Gamer, in which it owns a 90% stake. K2 Gamer has an assignment and consulting agreement with its affiliate ESP, which also signs up universities for esports events.


Source: Gamer Pakistan

Still, for now, the company has no profit or even revenue. For the first six months of 2023, expenses totaled $216.271, which was covered by private sales of equity securities and loans.

Auditor Mercurius & Associates LLP says its deficit “raises substantial doubt about the company’s ability to continue as a going concern.” That language is not atypical in filings by companies that are pre-revenue, such as pre-clinical biotechs.

The company said it expects to organize 12 or more tournaments in 2023 and expects to generate revenue from them.

The company also says it will not move ahead with the IPO if it fails to achieve a price of at least $4, the low end of its range.

Gamer Pakistan is headed up by Chief Executive James Knopf, a 58-year-old entertainment sales executive with more than 25 years of experience selling large-scale content distribution deals across platforms including TV, digital, mobile and over-the-top, or OTT services.

Knopf and his Pinstripe Entertainment Consulting firm worked with ESPN to produce the first NCAA College Esports Championship in 2019, which was streamed on ESPN3.

The Renaissance IPO exchange-traded fund
IPO
has gained 23% in the year to date, while the S&P 500
SPX
has gained 10%.

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