Gaming company plans ASX listing

A Perth-based online gaming company that has raised $14.6 million from private investors is pursuing a stockmarket float after reporting spectacular growth in revenue.

Virtual Gaming Worlds will trade as VGW Gaming after completing a backdoor listing through one-time IT company Synergy Plus, previously known as ComputerCORP.

In a prospectus lodged this week, Synergy Plus chairman Domenic Martino said VGW was currently operating at a monthly revenue run-rate equivalent to over $40 million per year.

That’s a huge jump in the space of just a few months.

One month ago, VGW said its annualised revenue was running at $27 million while in October it was quoted at $13 million.

In the year to June 2015, VGW’s actual revenue was $3.7 million and it incurred a net loss of $2.7 million.

Company founder and chief executive Laurence Escalante told Business News the revenue increase flowed from extra spending on marketing.

“We've been undercapitalised for most of the last two years, and unable to invest any meaningful amounts in marketing,” he said.

“In August we closed off a pre-IPO funding round of $2.5 million, which we've subsequently invested, and more, in growth marketing campaigns inside Facebook.

“The excellent growth has simply been due to the increased take up and growth in player base generated by our first extended growth campaigns that we've been able to invest in.”

VGW launched its first gaming product in 2010 and now has more than 10,000 paying customers.

Its core product is Chumba Casino, and most of its customers are in the United States and Canada.

Chumba Casino has been structured in a way that does not constitute gambling, even when it is used to play casino games, and therefore is not affected by prohibitions on online gambling.

The key is that players purchase so-called gold coins, which cannot be redeemed for cash.

However, players who purchase the gold coins are awarded sweepstakes credits for free, and sweepstakes winnings are redeemable for US dollars.

Subiaco-based Indian Ocean Group, which is chaired by Domenic Martino, has been signed up as corporate advisor for the listing, which includes a $3.5 million capital raising.

The reverse takeover will see Synergy Plus issue 932 million shares at 5 cents each to VGW’s current owners, valuing the deal at $46.6 million.

The vendors will also be issued 650 million performance shares and 95 million options.

The backdoor listing comes after VGW raised $14.6 million from private investors, mainly through local firms Triple C Consulting and Akru Jessy Capital.

This included $6.5 million in 2013, $1.4 million in 2014 and $4 million in 2015.

VGW’s board is led by executive chairman Nigel Blythe-Tinker, whose commercial experience includes roles with William Hill plc and Gaming VC SA.

Executive director Mats Johnson has worked for several online gaming companies including Centrebet, Coral Eurobet and Playsafe.

Mr Escalante, who will emerge with a 40 per cent shareholding in the listed company, has a background in financial planning, and was the founder of White Knight Games in 2004.