(Bloomberg) — Infinite Reality Inc., which has inked a deal to go public through a merger with Universal Security Instruments Inc., has agreed to acquire ReKTGlobal, an esports startup that abandoned a prior plan to combine with a SPAC.
“We were on the two-yard line to go public with a SPAC,” ReKTGlobal co-founder and Chairman Amish Shah said in an interview. “We could have gone solo and been a micro-cap stock, but we thought it was smarter play to be part of a bigger company in a hot sector,” he said, referencing the metaverse. The company pivoted to a $470 million all-stock transaction with Infinite Realty.
Infinite Reality, formed through the merger of Display Social and production company Thunder Studios, is valued at $2 billion, Chief Executive Officer John Acunto said in an interview. It plans to expand ReKTGlobal’s brands including League of Legends’ Rogue and Call of Duty League’s London Royal Ravens into the metaverse, potentially through the creation of esports stadiums and skyboxes, Acunto said.
“Together, there’s no reason we can’t do $100 million in revenue in 2022,” Shah said.
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Infinite Reality is in discussions to raise $150 million or more through a private investment in public equity, or PIPE, in a deal valuing the combined entity at more than $2.5 billion, said Acunto.
The firm has no ambitions to become profitable in the next 24 to 36 months, Acunto said. Instead, it plans to both build metaverses and provide tools for businesses and creators to build their own metaverses, which he says is “going to take a tremendous amount of investment.” The company is aiming to make additional acquisitions, he added.
“We believe that the future of business, entertainment, socializing and learning will be conducted in digital environments and that Infinite Reality is the company that will bring it all to life,” ReKTGlobal co-founder and CEO Dave Bialek said in an emailed statement.
ReKTGlobal’s investors include Summit Partners, Imagine Dragons, DJ Steve Aoki and Nick Gross, the son of Bill Gross. Investors in Infinite Reality and its affiliates include Hilco Streambank and Terracap Ventures.
In a March report, Citigroup Inc. analysts said the metaverse “may be the next generation of the internet” and that rather than being a purely virtual reality world, it may combine the physical and digital world in a “persistent and immersive manner.” The New York firm estimated the metaverse economy’s total addressable market could grow to between $8 trillion and $13 trillion by 2030 with 5 billion total users.
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