Case
Investment Attraction
Soul Partners has attracted funds for gaming studio 4А Games Ukraine from Tencent.
"Chinese technology conglomerate Tencent invested in Ukrainian video game developer 4A Games. The Company was raising funds to finance the development of new AAA video game. Tencent had never invested in Ukrainian companies prior to this Transaction, thus the investment process demanded accurate organisation and had to be backed up with strong position of the developer (4A Games Ukraine) to make funding beneficial for all participants. As a result of the negotiation process, all parties were satisfied with the terms of cooperation and signed Transaction agreements. The game itself will become available to gaming community soon"
Igor Verhogliad
Managing Partner
Investment attraction was preceded by a long period of business relations between 4A Games and Soul Partners, which was accompanied by series of meetings, mutual sharing of information about the market and its prospects, and providing of various consulting services to related companies. At that time 4A Games was a well-known Ukrainian studio that developed a series of METRO games.
The idea of a new game release arose in Company in 2018 and was gradually developing internally using own cash flows. The end of 2019 made it clear that launching game in a quality and timely manner could become feasible only with external investor participation due to limited funding of shareholders. 4A Games accomplished an initial search of potential investment funds and received positive feedback from the market. Thus, Company's management decided to begin competitive process and proactive fundraising.
The Company, a professional game developer, feel a lack of experience in financing attraction process from foreign investors. There is a widespread among Ukrainian companies but not effective approach to delegate M&A functions to the CEO who becomes involved in intensive and time-consuming M&A process alongside with Company strategical and operational tasks execution. These functions should be delegated either to internal M&A professionals or external qualified M&A consultants. At that time 4A Games recalled business connections with Soul Partners.
The Company, a professional game developer, feel a lack of experience in financing attraction process from foreign investors. There is a widespread among Ukrainian companies but not effective approach to delegate M&A functions to the CEO who becomes involved in intensive and time-consuming M&A process alongside with Company strategical and operational tasks execution. These functions should be delegated either to internal M&A professionals or external qualified M&A consultants. At that time 4A Games recalled business connections with Soul Partners.
Investment Attraction
- 1Negotiations with potential investorsSoul Partners joined process at a stage when the client had identified potential investors but had not started negotiations yet. Soul Partners was engaged as a sole investment attraction advisor and was expected to support investment process and conduct additional search for potential investors. At the same time negotiations with Tencent representatives on the terms of further cooperation were launched.
- 2Term Sheet review and negitiationsWe have managed to receive draft Term Sheet from Tencent quite quickly and started negotiations on the offered terms. Finally agreed with Chinese conglomerate's non-binding offer fully met Company's expectations and corresponded to market conditions.
Current market demonstrated attractive EV/Revenue and EV/EBITDA multiples for IT industry, hence sale of the Company or fundraising could be executed on the most beneficial terms for owners. - 3Due Diligence support and supervisionDue Diligence process started after approval of basic commercial terms in the Non-binding Term Sheet. At this stage Soul Partners' role was in investment project management, supporting legal, tax, HR, financial Due Diligence and structuring of the Transaction. Prior to Transaction Closing certain Condition Precedents (CPs) were to be fulfilled by management and under supervision of Soul Partners team.
- 4Negotiations on Transaction documentsPre-final stage of the deal was in drafting Transaction Documents. This stage demanded support by external legal advisor and, after formal tender process organised by the team, AEQUO was welcomed on board. Soul Partners' role was in negotiating commercial terms and coordinating all parties' actions. Eventually, Transaction Agreements between parties have been signed.
- 5Monitoring of Condition Precedents fulfilment and 4A Games Ukraine Holding restructuringTransaction Closing was subject to CPs fulfilment by 4A Games according to Transaction Agreements with Tencent. Soul Partners monitored fulfilment of all CPs, including coordination of obtaining approval from Antimonopoly Committee of Ukraine and completion of Company's restructuring. The whole process was continuing for a month and a half, and afterwards the Transaction was closed, and accounts were settled.
Result
Joint work of 4A Games management and Soul Partners resulted in the successful fundraising process. First ever Tencent's investment in Ukraine have been made. Investor received a minority stake in the Company and owners retained controlling interest in the business.
It was agreed that money transfer would be made in a single wiring, which guaranteed the Company unconditioned funding for game development and assured financial support for timely release of the game.
Joint work of 4A Games management and Soul Partners resulted in the successful fundraising process. First ever Tencent's investment in Ukraine have been made. Investor received a minority stake in the Company and owners retained controlling interest in the business.
It was agreed that money transfer would be made in a single wiring, which guaranteed the Company unconditioned funding for game development and assured financial support for timely release of the game.
Soul Partners team went through three consecutive investment processes with three potential investors, and closed the transaction with the latter.
EBRD-funded loan was attracted for postal and logistics operator
1a Sportyvna Square, BC "Gulliver", tower "B"
01023, Kyiv, Ukraine
01023, Kyiv, Ukraine
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