SportsHero, described as the first social network dedicated to sports prediction, is heading for a listing on the Australian Securities Exchange (ASX) through a reverse takeover (RTO) of Nevada Iron Ltd.
NVI – whic has issued a prospectus and conducted initial roadshows – has attracted strong investor interest during the events, company executives claimed, adding that SportsHero was expected to close the issue early, with a placement of 60 million shares of common stock at AU$0.05 per share.
Dinesh Bhatia, co-founder and CEO of SportsHero, explained that the service was developed to extend the sporting experience through daily, weekly and monthly contests, as well as to connect and facilitate the engagement of sports fans with sporting brands and sports sponsors globally.
This also comes at a time when sports is increasingly converging with the entertainment industry. A PWC report had forecast that global sports revenues will grow to $145.3 billion over the period 2010 – 2015, at an annual compound growth rate of 3.7 per cent. It also comes at a time when a growth narrative dominates Asian markets, with SportsHero looking to capitalise on these opportunities to around sports prediction and alternate sports revenues.
In an interaction with DEALSTREETASIA, Bhatia said the company was currently finalising its RTO to list on the ASX.
“We are looking to continue our investor outreach in Australia, once our ASX listing is completed. We are planning to grow our business operations more in Asia, especially with our market focus in the region. We currently have offices in Singapore and Shanghai. At some point, when we see our market grow in any particular geography, we might then grow our presence there,” he said.
He added that markets such as Indonesia, Thailand and Malaysia are also within Sportsheros’ primary focus, especially given their high interest in soccer and other sports in these growth markets.
One of the challenges he cited in growing the footprint of SportsHero was localisation, noting that TradeHero found success in China only after localising the mobile application to the Chinese language and culture. In the case of SportsHero, they would have to enhance mobile application to include the most popular sport i.e. basketball.
What are some of the difficulties associated with an RTO?
Over the past 12 months there have been many rule changes by the ASX relating to the compliance criteria for an RTO. It has been a challenging environment and remains so, especially for companies whose main business is located outside of Australia. This includes greater scrutiny on the nature business of the company being RTO, strength of the monetisation and revenue model, capital structure of the listed company, valuations and ultimate market capitalisation upon re listing.
The board and team and track record are also evaluated as the ASX have very clearly stated their intentions to only list companies with a strong team, sound business model and potential earnings. However we have a very experienced team and are hopeful we have now satisfied the criteria for a successful RTO of an Australian listed company.
Any specific plans for the Chinese and Japanese markets, given the presence of large sporting communities there?
China and Japan are markets with a huge domestic sports fan base. China in particular represents a strong opportunity for us; the Chinese government has plans to promote the development of China’s sports industry and consumption, with a target to have their domestic sports industry exceed $727 billion (5 trillion yuan) in value by 2025.
We have definite plans for China, but we feel that we need to get aspects of the product right, taking into account translation of psychology, needs and wants, before embarking on localising the app to the Chinese language and culture.
Do you think the SGX needs a Third Board? The SGX was cool to this idea, which was proposed by Singapore Business Federation. What are some of the current deficits of the SGX and what can it improve upon?
It is important to note that SGX is very highly regarded for certain segments of stocks, for example, resources, real estate, healthcare, consumer and dividend plays. Even Australian real estate companies consider listing on the SGX.
Currently SGX’s Catalist board is the alternative to the Mainboard that caters to the equity capital raising needs of less established but fast-growing companies. There is less quantitative entry criteria required for the Catalist board.
Did you consider other bourses such as the Nasdaq First North, the South Korean Kosdaq or London’s AIM? What should a tech startup look for when choosing a listing destination?
We did consider other bourses, but we view the ASX as the NASDAQ of Asia. The ASX does also market itself actively across the region. Australian retail investors are open to investing in early stage, small cap companies, due to their experience with mining companies, which are relatively high risk, high reward ventures.