GCIBlue Star Capital makes further investment in Dynasty eSports
(BLU ) told investors that its investee company, Dynasty eSports, has completed its fundraising round, raising US$5m at a pre-money valuation of US$45m.
Blue Star currently holds approximately 13% of the issued share capital of Dynasty.
The technology-focused investment firm noted earlier this month that Dynasty was to conduct a further round of fundraising to raise c.US$5m, based on a pre-money valuation of US$45m, a material increase in Dynasty's valuation based on its previous fundraising round.
Today, Blue Star has exercised its anti dilution rights and invested around US$0.65 (around £0.466m) to maintain its holding in Dynasty at c.13% of Dynasty's issued share capital.
The proceeds of Dynasty's fundraising is expected to be used to provide it with the ability to accelerate growth as well as to seek to convert a greater number of pipeline opportunities.
To date, Blue Star has invested c.£0.895m in Dynasty and, based on Dynasty's valuation of $50m in this latest fundraising round, its holding in Dynasty is valued at around $6.5m (c.£4.6m).
Commenting on the fundraising, Derek Lew, Chief Executive of Blue Star Capital said, "We are very pleased to have been able to participate in this fundraise for Dynasty. The business, under the stewardship of CEO Matt Lodge, continues to go from strength to strength and we believe has an extremely bright future as esports continues its global expansion."
Blue Star disclosed back in January that the value of its investment portfolio had grown by c.78% in its final results for the year ended 30 September 2020, moving it into profitability.
In particular, the esports market is experiencing significant growth. In 2020 it was estimated at around 495m viewers and is projected to reach around 646m viewers by 2023.
This is expected to result in revenues growing over the same period from $950m to $1.60bn.
Shares in Blue Star Capital have increased by nearly 20% since the beginning of 2021. The stock was trading 2.78% higher this morning at 0.185p following the announcement.
Reasons to BLU
Blue Star is an investing company with a focus on new technologies. Its investments include a 27.7% holding in SatoshiPay, a payments business using blockchain technology; investments in 6 early stage esports companies with shareholdings ranging from 5.9% to 13.6% and a 0.9% investment in Sthaler, an identity and payments technology business which enables a consumer to identify themselves and pay using just their finger.
The company provided an update in respect of its esports portfolio back in December 2020 as well as its investee companies - The Drops Esports Inc and Diemens Esports PTY Ltd.
Since the group’s initial £0.9m investment in six esports opportunities in November 2019, Blue Star has invested around £1.68m across seven companies. It has since invested in Guild Esports PLC, Dynasty eSports Pte Ltd and, most recently, in FORMATION Esports SaaS.
Based on the current valuation of Guild which was admitted to the standard segment of the LSE’s main market on 2 October 2020, and the higher valuation achieved by Dynasty in its subsequent fund raises, Blue Star's esports portfolio is now valued at £3.71m showing an unrealised gain of £2,035,890 and an increase of approximately 120%.
In its FY20 final results for the year ended 30 September 2020, which moved the group into profitability, the group said it had made a profit for the period of £1.7m compared with a loss in the corresponding period of £0.68m. The group cited the major contributor factor as ‘the uplift in valuation’ achieved on its investments in Guild Esports and Dynasty Esports.
The group hailed “an excellent year with strong performance” from its esports portfolio as well as “encouraging progress” from its tech payment businesses. It said its portfolio was successfully diversified with the move into esports which is now seen as its major focus.
Given the market growth and potential commercial opportunities, the Board ‘firmly believes’ that esports will eventually take up a significant proportion of the global sports industry.
Specifically, over the last twelve months, Blue’s esports portfolio has enjoyed two major successes and at the year end the valuation of the esports portfolio stood at around £3.8 million compared with an accumulated investment to date of approximately £1.7 million.
The board remains ‘highly confident’ in the strong underlying trends in esports and believes there is significant upside to be achieved moving forward from the esports portfolio.
Cash as at 30 September 2020 was £0.132m compared to £0.12m in the corresponding period. Post the year end the Company raised £0.095m through the exercise of warrants.
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