Reliance Games, the mobile gaming division of the Anil Dhirubhai Ambani-owned Reliance Entertainment Group, is looking to sell at least a 26% stake to international gaming companies to raise capital and expand its offerings, according to two people directly familiar with the development.

The company is looking to raise $15-20 million to fund its game engines, acquire more content, premium intellectual property (IP) and for user acquisition, according to a deal pitch sheet reviewed by Mint.

A spokesperson for Reliance Games declined to comment on the development
Reliance Games is looking at selling a 26% stake to a strategic investor, according to one of the two people cited above. The person declined to be identified.

“The company has started preliminary talks for selling a minority stake to a strategic investor. It is looking at international gaming companies that can take the company to China, South Korea, Japan, the US and other international markets,” he said.

He added that the company may look at raising funds from venture capital or private equity (PE) firms if they have significant expertise in the area of gaming.

“The company is strictly looking at strategic investors rather than financial investors,” he added.

Mumbai-based Reliance Games was founded in 2006. The company’s games can be accessed through 80 networks in 40 countries, according to the company’s website.

Reliance Games has been looking at expanding its studio’s game development capacity through organic growth and acquisitions. Its portfolio presently includes more than 600 games for over 2,000 devices across various operating systems including the iOS, Android, Windows, Java and Symbian. Some of its currently popular games include After Earth, the mobile game, Real Steel, Total Recall and F1 2011.

Forty-two percent of the revenue for Reliance Games comes from Canada and the US, followed by Europe, which accounts for 21% of its business. On 18 November, Reuters reported that Reliance Games plans to begin acquiring North American and European mobile gaming studios starting early 2015.

The company plans to also focus on the Indian market as it is one of the fastest growing smartphone markets globally, according to the deal sheet.

“India is playing a significant role in terms of developing gaming softwares, and the gaming industry is a growing sub-sector in the software industry,” said Raja Lahiri, a partner at Grant Thornton India LLP.

According to data available from Grant Thornton, transactions worth $168 million were recorded between January and November in the gaming space across two merger and acquisition deals. In terms of private equity deals, gaming firms raised $29.7 million during this period across five deals.
In June, venture capital firm Sequoia Capital invested $15 million as Series A funding in domestic mobile multi-player gaming company Octro.

“Gaming as a segment does not have deep outreach in the country, but there is significant amount of traction towards games because in times to come it will be a key segment,” said Sanjeev Krishan, partner and leader, PE and transaction services, PricewaterhouseCoopers Pvt. Ltd.

The article appeared in Mint. The article can be found here.