The first Chinese esports stock has finally been successfully listed.
On July 26th, NIPG. NASDAQ officially landed on NASDAQ, rising 45.66% on the first day of trading, reaching a high of $13.12 per share and closing at $9.02 per share, with a total market value of $506 million.
In this IPO, Xingjing Weiwu Group issued a total of 2.25 million ADS (American Depositary Shares) at a price of $9/ADS, with a total fundraising scale of $20.25 million. The underwriters include Deutsche Bank, CICC, Tiger Securities, and Guangfa Securities.
Xingjing Weiwu is well-known in the industry, with two major clubs, eStar and NIP, and is one of the most extensive and influential esports organizations in the world. As the chairman and co CEO of the company, He Youjun, the son of the "Gambling King", is the largest shareholder, holding 14.2% of the shares; Another co CEO, Hicham Chahine, holds 12.4% of the shares; President Sun Liwei holds 8.7% of the shares.
In addition, Wuhan State owned Assets is one of the important shareholders of Xingjing Weiwu. According to the prospectus, Wuhan Culture and Tourism Group holds 8.5% of the shares of Xingjing Weiwu through Shanghai Yuyun Enterprise Management Partnership (Limited Partnership), ranking among the top 10 shareholders.
And the listing of Xingjing Weiwu in the United States has also led to the emergence of investors behind it one by one. The prospectus shows that ZhenFund, SIG China, Shenzhen Guojin Angel Fund, and Douyu Investment are all investors of Xingjing Weiwu. In 2020, artist Wang Jiaer joined as a partner and beneficial shareholder.
There are multiple investors behind it
Your father is a very successful entrepreneur, and you have entrepreneurial genes. Why not start your own business? "Inspired by Wang Qiang, co-founder of ZhenFund, at the end of 2018, He Youjun decided to choose esports as his entrepreneurial direction and founded V5 Esports Club.
Less than a year after its establishment, V5's parent company Shenzhen Weiwu Esports Network Technology Co., Ltd. has completed a Series A financing of 120 million yuan, with funding institutions including Guojin Investment, ZhenFund, Jinlan Investment, StarVC, Jiangxi Riyue Ming, etc. Among them, ZhenFund invested 8 million yuan.
In 2020, V5 merged with eStar, a well-established esports club in Wuhan, through a stock exchange, becoming the largest acquisition in the Chinese esports market, and Star Sports was thus established. In January 2023, Star Sports announced the completion of its acquisition of the Swedish veteran esports club NIP, which is also one of the largest cross-border mergers and acquisitions in the world to date.
In 2021, Xingjing Weiwu completed its Series B financing, with investors including Douyu Asset Management and ZhenFund. After the merger in 2023, ZhenFund subscribed to 87000 shares for a consideration of 8.115 million yuan. Douyu invested 35 million yuan and 15.91 million yuan respectively in 2021 and 2023, subscribing to 2.9863 million shares and 171600 shares respectively.
In addition, SIG China subscribed for 1.16 million shares and 66900 shares in 2021 and 2023 respectively, but the payment consideration was not disclosed; Shenzhen Guojin Angel Fund also subscribed for 2.819 million shares and 162000 shares for 40 million yuan and 15.02 million yuan during the aforementioned period.
In fact, as early as 2017, ZhenFund invested in the eStar angel round, led by Guan Shanxing, the former head of ZhenFund's South China region and current president of INS New Paradise.
Regarding this investment, Guan Shanxing said, "There were many unexpected developments when we first invested in eStar, but behind it were still the unremitting persistence of China's first wave of esports enthusiasts
Two consecutive years of losses
According to the prospectus, Xingjing Weiwu currently owns multiple mainstream esports projects including League of Legends, CS, Honor of Kings, Rainbow 6, Rocket League, Fortnite, and Call of Duty Mobile. Its business covers Asia, Europe, South America, and has home venues in Wuhan and Shenzhen, as well as regional offices in Stockholm, Sao Paulo, and other locations.
As of December 31, 2023, Xingjing Weiwu has approximately 16 million followers on global social media platforms, over 120 professional players, and has achieved excellent results in global professional esports competitions multiple times.
According to the prospectus, Xingjing Weiwu's revenue increased from $65.835 million (approximately RMB 470 million) in 2022 to $83.668 million (approximately RMB 600 million) in 2023. In 2023, the revenue from its core business of e-sports club operation, talent brokerage, and event activities will account for 25.9%, 62.9%, and 11.2% respectively.
However, Xingjing Weiwu has been consistently losing money in recent years. In 2022 and 2023, the net losses of Xingjing Weiwu were $6.306 million (approximately 46 million yuan) and $13.258 million (approximately 96 million yuan), respectively.
Source: Prospectus
Xingjing Weiwu stated that the expansion of losses is mainly due to increased costs and decreased other income. In 2023, the operating expenses, sales and marketing expenses, general and administrative expenses of Xingjing Weiwu Group increased by 85.59%, 20%, and 142.86% year-on-year, respectively.
In addition, Xingjing Weiwu has also launched a "e-sports+" development model, focusing not only on operating e-sports clubs, but also on cultivating e-sports athletes into online artists. According to the prospectus, in the three major revenue sectors, Xingjing Weiwu's artist management service sector contributed nearly 60% of the revenue in 2022 and 2023.