Indiagames investors reap TOM rewards

Infinity Ventures and IL&FS Investment Managers (IIML) have earned a return on investments of 15 times and 13 times, respectively, following the sale of their stake in Indiagames to TOM Online.

Nasdaq-listed TOM Online, China's second largest gaming firm, had acquired 80.6 per cent stake in India's largest wireless game developer and global publisher of mobile entertainment. As per the deal, TOM Online acquired around 77 per cent of Indiagames' existing shares from investors and the management team of Indiagames.

Key management staff including Indiagames founder Vishal Gondal will retain the remaining 19.4 per cent stake in the company and continue to run the operations. The deal was transacted by Ernst & Young for Indiagames.

Both Shahzaad Dalal, vice chairman IIML, and Praveen Gandhi of Infinity stated that this represents a fine example of an investment made in a start-up with a sound business model providing a good exit. Infinity held approximately 40 percent stake in the company while IIML held 30 percent stake in Indiagames.

Both the investors invested in the company in early 2000. Infinity had invested Rs 1.9 crore and made Rs 30 crore from the deal. The investment was made through the firm's fund `Infinity India Venture Fund' which had a corpus of $22 million. IIML invested Rs 1.5 crore and made Rs 21 crore from the sell off. This investment was made from the firm SARA fund which had a corpus of Rs 110 crore.