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VFX company Prime Focus unit DNEG to merge with Nasdaq-listed SPAC

Press Release   Economic Times  

DNEG, a London-based subsidiary of publicly listed Indian visual effects and animation company Prime Focus, has raised INR 3,000 crore and will soon list on the Nasdaq stock exchange after merging with Sports Ventures Acquisition Corp, a SPAC or blank cheque company. The public entity will have a valuation of close to INR 12,750 crore (USD 1.7 billion) and will be led by Namit Malhotra as its chairman and CEO. DNEG is projecting approximately USD 400 million in revenue and adjusted EBITDA of USD 100 million for its fiscal year ending March 31, 2022 (FY22). It expects to receive approximately USD 400 million in gross transaction proceeds The transaction implies an enterprise value of approximately USD 1.7 billion for the combined company, representing approximately 11.4x FY2023E (ending March 31, 2023) adjusted EBITDA. Current DNEG equity holders will retain approximately 71% ownership in DNEG and will, assuming no redemptions by Sports Ventures' existing public stockholders, roll 85% of their equity interests into the pro forma company. Concurrently with the consummation of the proposed business combination, investors have committed to purchase USD 168 million of common stock of the combined company at a purchase price of USD 10 per share (the “PIPE investment”). The $168 million PIPE investment is anchored by investors including units of Sports Ventures, Novator Capital Limited, Fairfax Financial and Arbor Financial. The investment proceeds is expected to be used to help fund significant investments in technology, increase DNEG's capacity to undertake project work including hiring additional talent, expand newer business segments (such as gaming and content creation), and pursue accretive acquisitions and partnerships. Deutsche Bank Securities Inc. is acting as exclusive financial advisor to DNEG and is acting as joint placement agent on the PIPE investment. Latham & Watkins LLP is serving as legal advisor to DNEG. J.P. Morgan Securities LLC is acting as exclusive financial advisor to Sports Ventures, and joint placement agent to Sports Ventures in connection within the PIPE investment. Arent Fox LLP is serving as legal advisor to Sports Ventures and Sidley Austin LLP is serving as legal advisor to the placement agents. The proposed transaction includes committed debt financing arranged by Deutsche Bank Securities Inc. and NatWest Markets PLC.