2021 saw the beginning of a growing trend: esports companies choosing to offer their shares to the public by listing on one of the UK stock markets. Undoubtedly this is a result of the accelerated growth of the esports sector during the height of the Covid-19 pandemic lockdowns, particularly in the periods when there was an absence of any alternative sport. That said, this is almost certainly only the beginning, with the industry's global market revenue forecast to reach $1.62bn in 2024.
Gaming companies undertaking an initial public offering (IPO) is not a new phenomenon but this has tended only to be done by the major game developers such as Activision Blizzard, who own the Call of Duty franchise. Now however, there is a desire from every corner of the esports industry for entry to all markets, from the AQUIS Stock Exchange to the main market of the London Stock Exchange.
Why would esports companies choose to list?
Perhaps because there can be negative connotations associated with children playing video games, companies involved with esports and gaming often struggle to gain the level of legitimacy that they deserve. This is not helped by the existing prejudice towards the sector from the older generations, who can be reluctant to recognise how much an industry which is now far more profitable than Hollywood has to offer. Listing on the stock market provides a level of prestige and authenticity which can effectively eliminate these preconceptions, and provide evidence of the legitimacy of these companies.
The other key reason for esports companies to list on the stock market is the growing eagerness of potential investors in comparison with the more limited available products to invest in. One only needs to look at Microsoft's recent takeover of Activision to observe the big tech players, who so often have predicted the major trends, seeing the value of, and investing in esports and gaming to secure a strong financial future. The private wealth scene is also seeing an explosion of investment in esports, from Gerard Pique (of Barcelona football club) purchasing a League of Legends team, to Jesse Lingard (of Manchester Utd) announcing his own esports organisation. An IPO enables an esports company to tap into this huge pool of investment capital and place itself on the radar of big corporate investors and exciting sporting superstars.
How can we help?
We have experience of effective esports listings and fundraisings on the AQUIS Stock Exchange and AIM Market and have seen how these businesses have subsequently benefitted. Our most recent activity, advising the corporate adviser and broker on the listing of an esports organisation on AQUIS, saw the company face an oversubscription of its shares. With the capital raised, the company was then able to appoint Harry Maguire (of Manchester Utd) and Dominic Calvert-Lewin (of Everton football club) as brand ambassadors. Equally, after a fundraise on the AIM market, one company was able to acquire a target corporation to grow its business into a new sector.
Generally, the IPO process can be demanding for a business and its personnel. We have the expertise to effectively guide companies from the early beginnings right through to its conclusion. Our experience in this area also means we can, if required, introduce clients to other relevant parties in the process such as nominated advisers or brokers. If you are interested to learn more about listing your esports company, for example a general overview of the process or the different markets available to you, please contact Alexander Wood, James Wilson or Alexander Stoughton.