January 2022 Fundraise
Sector: Leisure GoodsAmount raised: £65.9m at 620p/share
Amount raised: £78.6m at 714p/share
Please note this article is commentary only and does not constitute advice or a personal recommendation.
Team17 is a British indie video game developer and publisher, developing a strong portfolio of games such as Worms and Overcooked!. Team 17 are focused on premium games, rather than free games, and they create and publish titles across a range of platforms (mobile, consoles, PC). Team17 has a separate division that collaborates with independent developers and aids them in accessing a larger market.
Team17 are also looking to grow their business through the development of educational apps for young children. This was highlighted in July 2021, when Team17 acquired the business and assets of StoryToys, an Irish company that was a developer and publisher of educational entertainment apps for children.
Through a placing in January 2022, Team17 raised £79m, enabling them to acquire a German simulation game specialist, astragon. They are a developer and publisher of its own and 3rd party ‘working’ simulation games across a range of gaming platforms. This is in addition to 2 other acquisitions in January; US-based indie publisher The Label and Hell Let Loose, both fitting into their drive to increase their educational app coverage.
JTC announced a placing in April 2021, raising proceeds of £66m, these funds would go towards reducing net debt and maintaining a strong balance sheet which would allow them to carry out their strong M&A pipeline. At the time of the placing JTC announced there were a few bolt-on opportunities, these included Segue Partners, a US innovative fund services provider, and Ballybunion, a boutique Irish asset manager.
The UK is the leading video game market in Europe, and one of the main drivers for this is the gaming industry’s digital transformation. The gaming industry has been a winner from the pandemic, with people forced in lockdowns to spend more time indoors. However, this is seen as a sustainable increase that was accelerated by the pandemic, with consumer spending and views on platforms such as Twitch remaining robust.
This has been an appealing sector, in which several of our previous holdings have been subject to takeovers, such as Sumo and Codemasters. This has also been recently illustrated by the announcement of Microsoft’s largest-ever acquisition of $75bn for Activision in January 2022. Team17 is very well positioned as they operate within the simulation gaming market which is forecast to grow at a faster rate than the broader gaming market. This more niche market tends to have higher player loyalty and high in-game monetisation, meaning that the characteristics of the revenue streams become more recurring.
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