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Delta Corp’s Arm Files IPO Papers With SEBI, Plans to Raise ₹550 Crores to Grow Its Online Gaming Business

Delta Corp’s Arm Files IPO Papers With SEBI
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  • Namita Ghosh June 21, 2022
  • 2 Minutes Read

On Thursday, June 16, Deltatech Gaming Ltd. – a wholly-owned subsidiary of India’s hospitality and casino giant Delta Corp that runs the poker platform Adda52 – filed the draft red herring prospective (DRHP) with the market regular Securities and Exchange Board of India (SEBI).

The company intends to raise ₹550 Crores through the IPO. The initial share sale will include the issuance of new equity shares (face value of ₹1) for an aggregate of ₹300 Crores and an offer-for-sale from the parent company to sell existing shares worth ₹250 Crores. The offer includes a reservation for subscriptions by eligible employees and Delta Corp shareholders.

Additionally, the company is also considering a preferential issue of equity shares or any other method aggregating up to 50 Crores. If such placement is completed, the fresh issue size will be reduced.

In its exchange filing, the company stated – “We wish to inform you that Deltatech Gaming Limited (formerly known as Gaussian Networks Private Limited) (“DGL”), a wholly-owned subsidiary of Delta Corp Limited (the “Company”), has filed a draft red herring prospectus dated June 16, 2022 (“DRHP”) with the Securities and Exchange Board of India, for a proposed initial public offering.”

The news comes in as a much-needed push for the BSE-listed casino giant, which has seen its stock prices plummet in the last few months since ace investor Rakesh Jhunjhunwala started dumping his stake in the company. The IPO announcement generated much interest in the scrip, with Delta Corp’s share price rising sharply in early trade on Friday.

Rakesh Jhunjhunwala
Rakesh Jhunjhunwala


The recovery was short-lived since Jhunjhunwala sold another 57.5 Lakh shares at the average price of ₹167.27 on Friday, bringing his holding down to 1.2%. While the Delta Corp stocks stumbled to ₹166.65 in mid-day trading on Friday, the stock has recovered somewhat and closed at ₹179.15 (BSE) on Tuesday, June 21.


IPO Offer – A Crucial Move For Deltatech

Deltatech’s IPO offer involves the book-building process, wherein not less than 75% of the shares on sale will be allotted to qualified institutional buyers, 15% of the shares will be offered to non-institutional bidders, and not more than 10% to retail bidders.

The Gurugram-based Deltatech plans to use the proceeds from its fresh issuance to strengthen its marketing strategy and undertake business promotion activities to help increase the growth of its online gaming brands like Adda52 and Adda52 Rummy organically.

According to reports, the company is looking to spend ₹150 Crores towards organic growth through marketing and business promotion activities to attract new and retain existing gamers. Another ₹50 Crores will be used to strengthen the technology infrastructure to develop new capabilities, maintain and manage its existing platform, and for general corporate purposes.


Delta Corp – Losing Its Sheen For Investors?

Deltatech taking its online poker and rummy businesses public will undoubtedly help the company and its parent firm, Delta Corp, reinstate its image as the market leader in the online gaming sector, which it has recently lost.

Since January 2022, the company’s shares have dropped by almost 30% on a cumulative basis. NSE data indicates that the company’s market capitalization is currently valued at ₹4,787 Crores.

According to an Economic Times report, Delta Corp’s net profit in the financial quarter ending March 2022 declined to ₹48.11 Crores, compared to ₹58.77 Crores in the same quarter in 2021. Similarly, revenue for this quarter recorded a moderate growth to ₹218.32 Crores vis.a.vis ₹211.34 Crores a year back.

A significant reason for this is that ace investor Rakesh Jhunjhunwala AKA the “Big Bull, has been steadily dumping the stock he and his wife own in the company. Till June 14, Jhunjhunwala had sold a 2.8% stake in Delta Corp through the open market, reducing his stake in the company from 6.16% to 3.36 %.

Last week, Delta Corp’s share price hit a 52-week low of ₹162.10. While the stock price shot up on Friday following the news of the IPO filing, the same day, Jhunjhunwala sold another 57,50,000 shares at the average cost of ₹167,17 per share, reducing his holding to 1.2%. As a result, Delta Corp shares hit a low of ₹166.65 on Friday afternoon, down by over 10.5% from the previous day.

The company has maintained a positive outlook for the near term and blamed COVID-19-related disruptions for the underperformance.

The company is struggling to keep its head up as the market leader at a time when the future and profitability of online gaming remain unclear. The Group of Ministers (GoM) set up to evaluate the GST being levied on online gaming is likely to recommend GST at a flat 28% slab from the existing 18% on skill games. While the GST Council decision is pending, the Narendra Modi-led Union government has finally taken cognizance of the need to regulate gaming and set up an inter-ministerial panel.

These developments come at a time with Delta Corp has significant investments underway. Last year, the gaming conglomerate estimated investment of between ₹1,000 to ₹1,500 Crores to develop its proposed integrated resort over 100 acres of land close to the new Mopa Airport at Pernem. Company CFO Hardik Dhebar, addressing analysts at a conference, had said that while the state government has approved the proposal for a 100-acre entertainment and casino complex at Pernem, “official communication” has yet to come through.

Hardik Dhebar
Hardik Dhebar


The project will include electronic casinos, themed hotels, water parks, and theaters and will be developed on 100 acres of land close to the under-construction airport at Mopa.

Delta Corp has made another significant investment on a new ship to replace the exiting Deltin Caravela, increasing the company’s current gaming capacity by 2.5 times. The vessel is expected to be brought into Mandovi in August-September once the monsoon season ends in Goa.

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