I suggest you read all the previous posts and then make up your mind.
If you want to invest in a UK listed company specializing in the rapidly growing sector of esports, this is the only game in town. The main risks as far as I'm concerned are that the directors have form in shafting ordinary PIs and there is a good chance that they will raise more cash in the future. Also the current market cap looks a bit punchy given the current revenue projections, see my recent AGM report for details
AGM report (December 2016)|
|is it a good share to buy ? thanks|
Not much of a write up in the Mail, but it seems to be having an effect:
|2017 STOCK TIPS
Presumably mentioned in a tip sheet, certainly nothing significant has happened since the AGM, their twitter feed doesn't offer any clues:
Sam Allen at their PR agency (Walbrook) might be able to shed some light
|as he speaks to himself....hehe|
|very quiet on here considering moves|
|strong move up this morning, has it been tipped?|
|As posted on the ShareSoc AGM forum.....
This year’s Gfinity AGM was held on Tuesday 20th December commencing at 10.00 at the company Solicitor’s HQ (Fladgates, 16 Great Queen Street, WC2B 5DG).
For Investors who are unfamiliar with the company, Gfinity is an AIM listed esports business that provides a hub for the global community who compete against, or view on-line competitors playing a range of best-selling electronic games such as “Call of duty” and “League of Legends”. Gfinity listed on AIM during December 2014 at 17p/share, raising £3.5m which valued the company at around £13m. Since the IPO there have been two placings: the first at 20p/share (Nov 2015); the second at 5p/share (July 2016). The company is currently valued at around £20m with a share price of 13.5p (mid). Gfinity is currently loss making, The house broker (Allenby) forecasts on November 8th suggested that the company should achieve its first full year profit for year ending June 2019 (0.56p/share) without the need for further equity funding. On November 17th Allenby issued a new note suspending earnings forecasts, (this followed Gfinity’s announcement concerning the Elite series), the broker stated “that the series represents a major investment for Gfinity and commercialisation is at an early stage. As a result we are suspending our forecasts until proof points start to emerge”
Links to Gfinity’s main gaming web site, main investor web site, the Annual Report, the AGM resolutions and the recent Broker notes are here:
Gamer's Web site
Corporate Web site
AGM Proxy form
Allenby Research Notes
There were around 12 attendees at the AGM including the Board of Directors and the usual AGM functionaries (Broker, PR and Registrar), I was the only ordinary shareholder present.
The Chairman (Tony Collyer) opted to begin with questions before moving on to the formal resolutions, so I duly obliged
My questions mainly centred around the last fund raising in July which was a heavily discounted placing at 5p/share. The directors did not need reminding that I had attended the general meeting at the end of July (which was held in order to seek shareholder approval for the placing) and that I had voted against both the resolutions at the previous meeting (my notes from the GM meeting in July are attached).
Q: Could you please go over the rationale for why you went for such a large discount for the placing in July, the placing was oversubscribed, therefore you should have adjusted the price upwards so demand matched supply, rather than demand exceeding supply.
A: The cornerstone investor (Charles Street) would not negotiate on the price (5p) or the percentage of shares they should own post placing (29.9%). We wanted them on board, they are well connected in the industry and will help the company develop.
Q: That is a lame excuse, you are rubbish negotiators. The non-execs should be looking after all shareholder’s interests, on this occasion they have failed to do that, unless you can come up with a more convincing reason I will be voting against both non-execs who are up for re-election this year
A: I can understand why you would want to vote against the NEDs, although note that one of the NEDs up for re-election (Jonathan Varney) currently takes no remuneration for his services.
Q: Should you need to conduct another fund raising, it should preferably involve an open offer to accompany a placing, should that not be possible for any reason, could you please ensure that at least existing shareholders who have supported the company in previous fund raisings are given the opportunity to participate, I know of several other AIM listed companies that have taken steps to do this in the recent past.
A: If we do raise further funds we will try to involve existing shareholders, but we cannot give any firm undertaking to do this.
Q: Could describe (on a sum of the parts basis) how revenues are currently generated, and how they might be generated in 2-3 years’ time which is when the House Broker estimates the company will achieve break even ?
A: Jonathan Hall (CFO) elected to answer the question
Gfinity revenue comes from 4 main activities:
* Gfinity’s own events: Gfinity branded events/competitions where Gfinity exploit all commercial rights through advertising sponsorship and broadcasting
* Partner events: Paid events/competitions for Games Publishers or sponsors (fee for service)
* Online digital: Online tournaments for hobbyists (revenue from sponsorship and advertising)
* Venue: hiring out the Gfinity arena at Fulham Broadway for events and product launches
For the current financial year the revenue split might be (reading down the bullet point list above) 20% : 60% : 10% : 10% . In three years’ time there should be a big increase in revenue from Gfinity’s own events to give a revenue split of around 55% : 25% : 10% :10% (Note: I assume this includes revenues generated from the proposed investment in Elite Series)
I indicated that I had no more general questions, so the Chairman moved onto the AGM resolutions. Apart from pointing out a typo in the Annual Report I had no further comments on the Annual Report or the Resolutions. When it came to the voting there were around 26m votes in favour of all 7 resolutions (which corresponded to around 17% of the total shares in issue), the only votes recorded against the resolutions were my votes against resolutions 2 and 4 (re-election of the two NEDs) and against resolution 7 (disapplication of pre-emption rights).
After the meeting I realised that I hadn’t asked whether any future fund raisings were likely to be eligible for EIS/VCT tax reliefs, so I put that to the CFO who then confirmed that the company should meet all the new criteria and therefore they should still qualify.
Since the meeting I have had time to reflect on whether I should sell, hold or accumulate. Given that I benefited from EIS tax relief in the IPO and the first placing, selling now is out of the question, so I will definitely hold at least until the 3rd anniversary of my purchases. I would definitely not buy in the secondary market at around the current price (such a purchase would not qualify for EIS tax relief), however if there were another funding round I would consider participating, but only if two conditions were met:
* The investment would have to be EIS qualifying
* I would need an assurance that the investors who took the placing shares at 5p/share were following their money and investing again.
If I didn’t have these assurances, I would definitely pass.
[Note this is not a verbatim record, I did not make a recording of the event)|
|I attended the AGM earlier today, I was the only private shareholder, it was a useful meeting and I gained a few insights, I will write up a few notes and endeavor to post them tomorrow.|
|Results out today, no date yet for the AGM which I shall attend this year to ask them whether there is any intention in the next year or so to repeat the shafting they gave ordinary PIs earlier this year with another mega discounted placing with no accompanying open offer.
It looks like Allenby are now forecasting breakeven in 2019 (see below), so with a current market cap of £16m Gfinity are consigned to my bottom draw for another 12 months or so (unless there is discounted fund raise in which we can participate in the meantime)
|Major article in the Times today wrt eSports.
Relevant to GFIN?
Bookies prepare for war as an esports revolution puts $2bn on the gaming table
|The Gfinity general meeting to approve the placing of 74,000,000 new ordinary shares at a price of 5p per placing share to raise £3.7m was held today (July 20th) at the offices of Fladgate LLP at 16 Great Queen Street, London.
There were around 10 attendees which included the BOD (Chairman Tony Collyer, CEO Neville Upton and CFO Jonathan Hall) and representatives from the broker (Allenby) and the PR firm (Walbrook). Not surprisingly I was the only ordinary PI present.
The Chairman kicked of the meeting with the normal formalities before coming to the resolutions and then invited comments and questions.
I started off by stating that I had invested in both the IPO and the placing at the end of last year and I was extremely disappointed with the huge discount of the current placing. I acknowledged that in this case that it may have been difficult to conduct an accompanying open offer for existing shareholders but questioned why I was not given the opportunity to participate in this placing at 5p when my money had been readily accepted for the IPO at 17p and the previous placing at 20p, I added that I now want to apportion blame, was it the fault of my broker, the BOD or Allenby, so needed answers to some direct questions to help me with that.
Q: Why the huge discount?
A: We wouldn’t have got Charles Street on board without it, they dictated terms, they wanted 29.9% and they were the cornerstone investor, we wanted their expertise and contacts (as well as the cash). They are in regular contact and they will be a bit like unpaid non-execs. We did discuss ways of getting current shareholders involved, but we couldn’t find a way to make it work. [They then commented that the share price was now doing well indicating that the market regarded the placing as good news and that I could have got in at a good price immediately after the placing announcement (8p). In response I pointed out that 8p was 60% higher than 5p so that was irrelevant].
Q: You are issuing 74M shares, the offer document identifies where around 63 million shares issued have gone, what about the other 11 million shares, who has taken them?
A: There were 4 other placees (7 in total), two of these were smaller institutions and two were uber high net worth individuals who were invited to apply as we wanted them on board for their expertise. The directors deliberately excluded themselves from the placing so they have suffered the same dilution as other shareholders.
Q: So to clarify the remaining placing shares were not offered around the so called bucket shops.
A: That is correct.
Q: Are any time restrictions on the 7 placees for disposing of their shares?
A: No, but they are not the types who flip, besides you can’t flip several millions of shares.
The Q&As probably went on for about 20 minutes, and in their expanded answers the BOD did seem very upbeat about the recently announced deals and future prospects. I told them that I was somewhat placated following the Q&A session, but I still intended to vote against both resolutions even though the outcome was a forgone conclusion but at least it would ensure they couldn’t use the word unanimous in the resulting RNS. I reminded them that there was a requirement to read out the proxies after each resolution and it was considered best practice to publish the proxy votes in the resulting AGM RNS.
Each resolution received around 14.5m shares in favour and just over 4,000 shares against (I hadn’t submitted my proxies otherwise it would have been more) and I was the only dissenter present at the meeting on the show of hands.
After the meeting I had a good natured chat with the BOD and with the representatives from Allenby and Walbrook. When discussing the possibility of any future fund raisings we touched on the subject of the new onerous EIS rules regarding qualifying investors which came in to effect last November, these disqualify an investor receiving EIS tax relief in placings and open offers if they already hold shares in the company which were purchased without EIS relief. We all seemed to agree it was a ridiculous rule.
I mentioned that Neville should now do it bit more on the PR with some recorded interviews and investor presentations, he agreed that he had been a bit light on those activities recently and should now do more. During the post-meeting chatter, I overheard one of the directors saying that they should now be out of a closed period, so they should be free to buy shares. It didn’t really sound like a statement of intent to buy shares though, so make of it what you will.|
|Just out of the GFIN general meeting, will write up some notes later
I was the only ordinary PI there needless to say.|
|Anyone know why the share price has risen so much, given the announcement made earlier this month? Happy that is has though but don't understand why. What am I missing?|
|This big raise is appalling news for those existing investors who were not invited to participate given that it was over subscribed and at a huge discount (why both?). I attended the AGM last year and I specifically raised the point that if there were another fund raise they should look at all avenues to give existing shareholders a bite of the cherry.
I participated in the IPO and the last placing and I get this as a reward: a big kick it the nuts, I'm annoyed and I intend to attend the GM and give them (specifically the directors and Allenby) both barrels on July 20th.
On a related topic, I'm attending another event hosted by Gfinity's PR firm (Walbrook) on Tuesday evening, so I will see if I can find out a bit more about the new investor, Charles Street International Holdings, as a google search revels absolutely zero.|
|BG- I think gfinity is the future growing trend of online events/sponsorships.
If this is done right they could end up very big indeed.
You need to look to the future (3/5 years and see how this could go.
Lots of potential and I have a few tucked away.
My partners son is in to computers big time and is starting to actually write games himself.
He has staggered me with numbers and figures of how many take part/watch tournaments online.
Big money to be made and where there's a captive audience involved you can be sure big sponsorship will follow
It's the future and it's only going to grow.
Great buy out potential moving forward and got some big hitters involved who own stock.|
|Another Allenby raise at a very low base from the share price only a few weeks ago. Surprised they're not closer to 5p than 10p though especially with the cash being used for "general working capital" .Is there more to these than meets the eye?|
|not this one though timbo003
|Just spotted this, fresh news today - looks encouraging if Strive can make the right connections...
"Strive Sponsorship, the sport and entertainment marketing consultancy founded by former Team Sky Head of Partnerships Malph Minns, has added its first rightsholder to a growing roster of clients after a competitive pitch process.
Strive will advise Gfinity, an AIM listed electronic sports (eSports) business that hosts leagues and events, on how to monetise the rapidly expanding global community of competitive gamers through sponsorship. With over 226m fans regularly engaging with eSports, and growth predicted to reach 345m by the end of 2019 (source: Newzoo), Gfinity’s ambition is to become the leading promoter of eSports events globally."
|There's a new interview with Neville Upton on ProActiveinvestor regarding the new Gfinity app for Microsoft's X-box which was announced earlier today.
Well worth a listen.