Business / Corporate

Shooting for investors: Counter-Strike world champs aim for first esport team IPO

Bloomberg

Denmark’s Astralis is set to become the first esports team to go public in a bid to cement its status in a $1.1 billion global market that’s more than doubled since 2016.

Astralis is ranked the world’s number one in Counter-Strike: Global Offensive, a popular first-person shooting game, and has won millions of dollars in tournament prizes. The success has earned it commercial endorsements with brands such as Audi and Logitech. Now operating as a media company, the Astralis Group has expanded with teams competing in League of Legends and EA’s FIFA.

The listing is due to take place Dec. 9 on Nasdaq’s Copenhagen exchange for small companies. According to its prospectus, Astralis plans to raise 125 to 150 million kroner ($18 million to $22 million), with shares priced at 8.95 kroner.

Professional esports is by no means in its infancy — in the 1990s, games like Counter-Strike, Quake and StarCraft were staples of a competitive gamer’s diet, and businesses sprang up to bolster the titles’ longevity and appeal. But Amazon.com Inc.’s Twitch and Google’s YouTube created platforms for spectators to watch by the millions, and with that came enormous marketing and sponsorship opportunities.

According to recent projections, the global esports market will generate almost $2 billion in 2022, with global esports viewership expected to reach 595 million that year.

Superstars like Kyle “Bugha” Giersdorf have brought winning potential into the view of broader audiences. In July, hundreds of thousands of fans went online to watch the 16-year-old win the Fortnite World Cup final in New York.

“We believe that the foundation of some of the most valuable and iconic brands in 10 years’ time is being set today,” said Astralis Group Chief Executive Officer Nikolaj Nyholm.

Nyholm says he’s confident that the IPO will succeed and cites pre-commitments worth around $8 million “from a range of European and Asian investors.” The subscription period ran out on Friday.

A successful IPO would provide a yardstick for other esports valuations. But the CEO, who has a background as a venture capitalist, says he understands why some might be hesitant to invest in a new area with only limited historical data to draw on.

“In this respect it is also our responsibility to help educate the market through a continuous high level of information,” Nyholm told Bloomberg in an emailed response to questions.

Per Hansen, an investment economist at Nordnet in Copenhagen, says he expects the offer to be oversubscribed, given the levels of pre-IPO subscriptions.

“There’s a lot of buzz around esports and what it might turn out to become in five years’ time,” Hansen said. The timing is also good, given investors’ appetite for new equity during the current regime of ultra low interest rates.

Nyholm says going public rather than raising venture capital will allow Astralis to focus on a longer time horizon and “allow us to bring new investors on board.” The money raised will help “strengthen our position in the market through investments in our brands and media platforms. We will also look to use the listing to position us well in an anticipated future market consolidation,” he said.

The world’s most valuable esports company, Cloud9 is worth $400 million, according to Forbes.