MTG and Huya INC. Form a Joint Venture; ESL Plans to Expand in China

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Modern Times Group (MTG) and Chinese live-streaming website Huya.Inc have entered a binding term sheet which will allow Huya Inc. to acquire a minority stake in MTG’s portfolio company ESL. 

The announcement comes in the form of a joint venture between MTG and Huya Inc. which will help ESL expand into the Chinese market. The USD 30 million investment comprises a mixture of primary and secondary shares. 

  • ESL and Huya plan to host and build local Chinese esport competitions connected to the global ESL tournament calendar to ensure maximum Chinese esports athlete participation on a global scale.
  • As part of the transaction, ESL will issue new shares at a value of USD 22 million to increase capital to be used for further expansion, parts of which will be used by ESL to fund its pro rata part of the joint venture company.

How does this affect Huya INC.’s Global Aspirations?

 

Huya Inc. is slowly entering into partnerships with western teams and Tournament organizers. They recently entered into a partnership with Team Liquid.

Huya Inc. is a Chinese Interactive broadcast platform with a large and active community. The company regularly cooperates with Esports event organizers and game developers. Its growth has run parallel to the growth of the esports industry in China. Huya has increased the scope its platform to act as a marketplace for talent agencies to coordinate with the company. 

Huya Inc.(NYSE:HUYA) closed at USD 25.05 on August 30 and has a market cap of USD 5.49B with 223.88M shares outstanding. Analysts that follow this company expect the company to continue its growth for the next five years at 9.64%. However, the recent joint venture announcement might change these projections. 

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The lack of a Global presence limited Huya Inc. to the Chinese market till now helped immensely by a USD 461 million investment by Tencent Games in May 2018. With this joint venture, and the minority stake in ESL, Huya Inc. moves to strengthen its global aspirations. 

We are pleased to establish a close partnership with ESL, which demonstrates Huya’s further penetration into the global esports sector. Together with ESL, we are thrilled to bring more world class global content to Chinese Gaming enthusiasts. 

Huya CEO Rongjie Dong

What Is ESL’s Valuation After This Investment?

 

Huya’s Joint Venture with MTG will also include a minority investment in its portfolio company Turtle Entertainment GmbH (ESL) Image Credit: MTG

Huya’s USD 30 million investment in ESL comes at a pre-money Enterprise Valuation of USD 425 million. The Joint venture and the acquisition of the Minority stake in ESL are subject to customary confirmation due diligence and the signing of definitive transaction documents. 

ESL’s value would increase to USD 455 million and Huya Inc. will own a 6.6% stake in ESL. This is the first major investment and shareholder in ESL following MTG’s investment in 2015. ESL and Huya aim to host Chinese events and bring add them to the ESL Global Calendar. It will allow more opportunities for Chinese players and teams to take part in the Global Esports economy. 

Please find the official Press Release here


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