In its half-year results for the period ended 31 March 2021, Blue Star Capital (BLU ) reported an increase in its net assets from £8.92m compared to £5.96m in the same 2020 period.
The investment firm reported a loss for the period of £0.49m compared with a loss of £0.18m for the six months ended 31 March 2020. The group said the increase had been mainly accounted for by adverse foreign exchange movements on the investment portfolio.
By period-end Blue Star held £0.059m in cash compared to a balance of £0.07m in 2020. Post-period, in April 2021, it raised around £1.02 million and made further investments of around £0.466 million into Dynasty eSports Pte and £0.2 million into the NFT Investments.
Subsequent to the period end, Blue’s portfolio firm, Dynasty Esports, successfully completed a financing round resulting in a post-money valuation of $50m in April 2021. Having maintained its 13% holding, Blue Star’s investment based on this valuation, increased from around £1.3m to c.£4.6m which is expected to be reflected in its full year net assets.
The Company, which holds eight esports-focused companies within its portfolio, cited the global esports market as a rapidly growing economy. In terms of revenues, the industry exceeded US$1bn for the first time in 2019 and is forecast to reach over US$1.5bn by 2023, from sources including sponsorship, media rights, merchandise and tickets, Blue noted.
In particular, Blue Star cited its ongoing investment in Dynasty Esports which has signed a number of Software as a Service (SaaS) agreements for its platform since June 2020, with one agreement having been signed to the largest telecom’s carrier in the Middle East.
Commenting on the half-year results, CEO of the Group Derek Lew said: “The recent esports announcements relating to Guild and Dynasty have helped to illustrate the upside from our esports investment portfolio and the Board remains highly confident that this area of investment offers the potential for a significant improvement in net asset value.”
Following the successful $50m fundraising in April 2021, Dynasty further announced its intention to seek an IPO on the Australian Stock Exchange (ASX) within 12 months.
Meanwhile, in regard to its investments in the blockchain and payments space, Blue Star said its long-term shareholdings in payment companies SatoshiPay and Sthaler continue to progress and “while taking time to mature, provide another exciting area of investment.”
“Overall, we are pleased with progress over the period, and, in particular, the further advances made since the period end, and look to the future with confidence,” added Lew.
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Blue Star disclosed back in January that the value of its investment portfolio had grown by c.78% in its final results for the year ended 30 September 2020, moving it into profitability.
In particular, the esports market is experiencing significant growth. In 2020 it was estimated at around 495m viewers and is projected to reach around 646m viewers by 2023. Blue has established a foothold within this space with stakes in Guild Esports and Dynasty eSports.
Blue’s investment here is expected to result in revenues growing over the same period from $950m to $1.60bn. Shares in Blue Star Capital were trading 0.75% lower this morning.
Blue Star is an investing company with a focus on new technologies. Its investments include a 27.7% holding in SatoshiPay, a payments business using blockchain technology; investments in 6 early stage esports companies with shareholdings ranging from 5.9% to 13.6% and a 0.9% investment in Sthaler, an identity and payments technology business which enables a consumer to identify themselves and pay using just their finger.
The company provided an update in respect of its esports portfolio back in December 2020 as well as its investee companies - The Drops Esports Inc and Diemens Esports PTY Ltd.
Since the group’s initial £0.9m investment in six esports opportunities in November 2019, Blue Star has invested around £1.68m across seven companies. It has since invested in Guild Esports PLC, Dynasty eSports Pte Ltd and, most recently, in FORMATION Esports SaaS.
Based on the current valuation of Guild which was admitted to the standard segment of the LSE’s main market on 2 October 2020, and the higher valuation achieved by Dynasty in its subsequent fund raises, Blue Star's esports portfolio is now valued at £3.71m showing an unrealised gain of £2,035,890 and an increase of approximately 120%.
In its FY20 final results for the year ended 30 September 2020, which moved the group into profitability, the group said it had made a profit for the period of £1.7m compared with a loss in the corresponding period of £0.68m. The group cited the major contributor factor as ‘the uplift in valuation’ achieved on its investments in Guild Esports and Dynasty Esports.
The group hailed “an excellent year with strong performance” from its esports portfolio as well as “encouraging progress” from its tech payment businesses. It said its portfolio was successfully diversified with the move into esports which is now seen as its major focus.
Given the market growth and potential commercial opportunities, the Board ‘firmly believes’ that esports will eventually take up a significant proportion of the global sports industry.
Specifically, over the last twelve months, Blue’s esports portfolio has enjoyed two major successes and at the year end the valuation of the esports portfolio stood at around £3.8 million compared with an accumulated investment to date of approximately £1.7 million.
The board remains ‘highly confident’ in the strong underlying trends in esports and believes there is significant upside to be achieved moving forward from the esports portfolio.
Cash as at 30 September 2020 was £0.132m compared to £0.12m in the corresponding period. Post the year end the Company raised £0.095m through the exercise of warrants.
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