Draper Esprit gets £39m from sale of Peak Games

DUBLIN-listed venture capital firm Draper Esprit will receive approximately £39m (€43m) in cash after game developer Zynga purchased a company in which it had invested.

Zynga has acquired Peak Games, the Turkey-based gaming business which develops games for Android, iOS, and Facebook platforms, for a total price of around $1.85bn (€1.64bn), made up in roughly equal proportions of cash and Zynga stock.

Draper Esprit expects to receive the £39m in cash from the deal, which was first reported last month, “in the coming days”.

The remaining balance of shares in Zynga are to be held subject to a further six months lock-up.

On the basis of the current Zynga share price, the sale indicates a fair value holding for Draper Esprit of approximately £88m, according to a statement from the company.

“This transaction represents a significant return on our original investment and builds on the strong momentum we have already generated since starting the new financial year,” said Martin Davis, Draper Esprit’s CEO.

“We look forward to watching Peak Games’ ongoing development as part of Zynga and have no doubt that the business will continue to flourish.”

The sale is the first investment realisation of this financial year to 31 March 2021 for Draper Esprit, and follows total exits realised in the 12 months to 31 March 2020 of £40m.

Commenting on the transaction, Gerry Hennigan, analyst at Goodbody Stockbrokers, said: “Longterm trends aside, the pending cash in-flow effectively doubles cash resources available to the group… and provides additional capital to deploy towards a previously guided robust pipeline of opportunities.”

Earlier this year, Draper Esprit said it had made a provision for a £99m adjustment across its portfolio due to the impact of the coronavirus pandemic on the value of businesses.

That modification is on the pre-coronavirus estimates from the company and is equivalent to a 21pc adjustment across 53pc of its portfolio, according to an update from the group in May.

Before the onset of the Covid-19 pandemic, the company had targeted 20pc portfolio growth.