Publicly traded esports and gaming company Allied Gaming & Entertainment (NASDAQ: AGAE) secured a $6.6M USD strategic investment from Hong Kong-based private equity firm Yellow River Global Capital.
Under the terms of this new “strategic relationship,” Yellow River Capital Group subscribed to 6M shares of AGAE’s common stock. The firm also received a warrant to purchase up to an additional 6M shares over the next five years at an exercise price of $1.80 per share, representing a 50% premium to AGAE’s closing price on October 17, 2024 (valued at $10.8M).
As part of the deal, Yellow River also gained the right to appoint one “Class A director” to AGAE’s board of directors and has selected Zongmin (Philip) Ding for the position. Ding currently serves as director of Guangzhou Seagull Kitchen and Bath Products, director and general manager of Shanghai Guo Chun Venture Capital, director of Shanghai International Group Venture Capital, director of Datong Taicera Ceramic Industry Co., Ltd., and general manager of Shanghai Qinshui Family Business Management Co.
In addition to the investment, Yellow River will provide AGAE with “strategic resources, networking opportunities, and industry expertise that will be extremely valuable as the company advances its strategic initiatives forward,” according to a release.
Hong Kong-based Yellow River Global Capital Limited was founded in 2016 by Carlos Oyarbide, who left his role as managing director and chief operating officer for Morgan Stanley in China, to start his own private equity firm focused on investing in the Chinese technology sector. At the time, Oyarbide aimed to raise half a billion dollars to fuel his investments. Prior to launching Yellow River, Oyarbide spent more than ten years in executive roles at Morgan Stanley London and Morgan Stanley Hong Kong, more than four years at Credit Suisse Hong Kong, and more than eight years at Morgan Stanley China.
In its most recent quarterly report (for the second quarter ended June 30) AGAE reported a net loss of $3.9M, compared to a net loss of $700K in the same period a year ago (adjusted EBITDA loss was $1.4M, compared to $1.1M in the Q2 2023). AGAE is best known as the owner and operator of HyperX Arena Las Vegas at the Luxor.
In September, The Esports Advocate reported that AGAE faced a shareholder dispute from Ourgame International Holdings Limited, which sent a legal letter to the company’s board of directors expressing concerns about a potential change in control over Allied Gaming & Entertainment and the dilution of its shares due to actions such as amendments to the company’s bylaws.