London-based, publicly-traded esports organization Guild Esports (LSE: GILD; OTCQB: GULDF) announced Monday that it is in the process of bringing on a new – yet to be disclosed – largest shareholder as part of a £500K – £1M GBP deal. The strategic investor is described as”an international esports, content creation, and media brand.”
As of Monday, the unnamed “brand” is supposed to have acquired a 13.84% stake in Guild Esports for £500K ($607.5K USD), surpassing Toro Consulting (6.5%) as the esports organization’s largest shareholder – David Beckham is now the fourth largest shareholder in the company with a 3.4% stake. The all-cash deal sees the new investor buying newly-issued ordinary shares in Guild Esports up to a total of 200M newly issued shares.
The new investor agreed to purchase 100M new shares in two £250K ($303.75K) tranches at a price of £0.005 per share, which were due and payable on Oct. 30. A third tranche worth £500K ($607.5K) is optional and dependent on further negotiations between Guild Esports and the new investor. However, under its current listing terms Guild Esports is not able to issue the full 200M new shares, therefore, the company will create a new prospectus outlining the issuance of its new share and make an application to get the new listing admitted. In case, Guild Esports is able to secure the deal’s third tranche, the new investor will own a 24.3% stake in the company and the stakes held by existing investors will be further diluted.
The deal valuates Guild Esports at £4.11M ($4.99M), a significant collapse compared to its £50M ($60.75M) IPO valuation in October 2020, when the company raised approximately £20M ($24.3M) through the issuance of 250M new shares.
Guild said in its release that these funds will be used to grow its services, as well as fuel “international expansion,” with a particular focus on MENA (the Middle East and North Africa region). The company also made it a point to mention the Esports World Cup, which was announced last week at the Next Global Sport Conference in Riyadh. Guild Esports CEO Jasmine Skee was at the event as part of a panel. Guild was one of the few esports organizations in the world to publicly announce its participation in the Summer 2024 event. From the release:
“Regional governments are investing heavily in esports, with the Kingdom of Saudi Arabia recently announcing the Esports World Cup, expected to have the largest prize pool in esports history (source: Reuters, 2023). The Directors of the Company believe that MENA offers the opportunity for rapid growth and are keen for Guild to establish an immediate foothold in the region.”
The Esports Advocate reached out to Guild Esports investor relations and CEO Jasmine Skee prior to the publication of this story to ask if there was any connection to the Esports World Cup, the Saudi sovereign wealth fund (the Public Investment Fund), the Saudi Esports Federation, or any other government backed companies. A Guild Esports spokesperson told us the following on Monday morning:
“As Guild is listed on the London Stock Exchange and a public company, we’re not able to disclose any further information than has been announced to the market. We can confirm that there are no Saudi government ties in relation to this deal and that further updates to the market will be made in due course.”
While Guild Esports has yet to publicly disclose who is becoming its new largest shareholder, the company will have to file the paperwork revealing its investor as soon it transfers ownership of its new shares as the LSE requires all investors with a 3% or higher stake to be disclosed. Additionally, further information on the new investor could be shared in the expected prospectus.