Atilla Aytekin (51) quickly puts on a jacket and slides behind his computer. The PC contacts investors in London via a Zoom connection.
The founder of Azerion, a digital gaming and advertising platform, would normally visit new lenders, but that is impossible due to corona. He now has to convince them from his office in an industrial area in Schiphol-Rijk, a village around the runways of the airport.
Further in the office, Nicholas ‘Nick’ Aperghis (50), a tall man with a trimmed beard, watches with satisfaction. Aperghis is the founder of EFIC1, which is listed on the Amsterdam stock exchange, short for European FinTech IPO Company 1. He came up with the idea to merge EFIC1 and Azerion.
EFIC1 is a so-called spac, a special purpose acquisition company. This is a listed investment vehicle, established to acquire a company. The phenomenon has been on the rise in recent years, especially in the United States. Spacs are also popping up on the Dutch stock exchange.
It works like this: investors put money into a fund that goes public. The board of that fund then looks for a company to take over with the money invested and the proceeds of the IPO. “For the companies that are acquired, it is an attractive way to quickly acquire a stock exchange listing,” says Aperghis. Because by merging with a spac, they avoid the sometimes time-consuming process for an IPO. Think of a vetting by analysts, or gauging interest for your company at banks.
Aperghis founded the spac in March 2021. EFIC1 contains more than 400 million euros in capital, raised by institutional parties and a handful of wealthy individuals who sometimes invest millions.
Aytekin calls the investors in EFIC1 today via the Zoom connection. On January 31, the shareholders of the investment vehicle will meet to vote on the merger with Azerion. Before that date, Aytekin has to convince them to give the green light, so that he gets a listing with Azerion on Beursplein 5.
Azerion is a fast-growing and profitable company with a turnover of more than 300 million euros. The company has more than 16,000 online video games in its portfolio and says it has 425 million visitors per month, who play a game online 334 million times.
The portfolio ranges from traditional thinking games, such as crossword puzzles and chess, to community games such as Habbo Hotel – for young and old. The youngest gamers can learn to count with the Miffy (Miffy) app, while their parents play poker with Governor of Poker, an online game that became a hit thanks to coverage on the popular football talk show Veronica Inside, and grandpa and grandma play a game of solitaire online.
The games are free, Azerion’s revenue model is based on advertisements. The company combines game offerings with an automated digital advertising trading system. Third parties can also use this. 80 percent of Azerion’s revenue comes from advertising. The rest comes mainly from purchases within games.
Turkish study association
Atilla Aytekin is the son of a Turkish immigrant. After studying administrative information science in Tilburg, he finds work at the now disappeared software giant Baan. After a few years he decided to start his own business. But his software company goes bankrupt in 2001. “I was radically rash,” he says. He leaves 1 million euros in debts and ends up in debt counseling.
Then he starts his own company again. In 2002 he founded software company Triodor with Umut Akpinar, whom he met during his studies at a Turkish study association. Akpinar, an electrical engineer who worked at Philips, is a kindred spirit. He also comes from a Turkish immigrant family. “We are the Snip and Snap of the Lower Turkish tech industry”, Aytekin once described their collaboration, referring to the successful revue duo Willy Walden and Piet Muijselaar.
Triodor flourishes, but that does not satisfy the two founders enough. The company makes custom software. For example, it provides information technology that gives farmers better insight into the transport of their products, such as a track-and-trace system for eggs. “We were able to send an invoice at the end of the month, but if a customer resold the online finds for ten times more, Triodor didn’t benefit.”
That doesn’t sit well with the two. They want to earn money from their products themselves and not just bill for hours. In 2014 they decide to focus on the online games market. Triodor has a daughter: Azerion.
Aytekin and Akpinar see a young and fragmented market in which Azerion can play a role as buyer and financier of smaller gaming companies. Thousands of “attic room nerds” invent games, but often fail to develop a business model. “That is a requirement. If you don’t achieve the right scale, you can’t make a profit.”
As of 2014, Azerion will acquire more than forty companies in Europe. For a small game company like the German Softgames they pay 1.2 million euros. For larger ones, such as the German Whow Games, they pay 56 million euros.
Azerion now has a thousand employees in eighteen European countries. In its own words, turnover increased by 50 percent last year to 300 million.
The success does not go unnoticed. In recent years, Aytekin has been approached several times with proposals to work together, but he rejects them. “Dozens of companies wanted to invest. London funds contacted us. One came with a check that we only had to sign – an amount with seven zeros. We didn’t, we thought it was too early.”
Growing Worlds
When Nick Aperghis reports to Azerion in April 2021, Aytekon still has little incentive to start a conversation. “I gave Nick and his colleagues a 2% chance to convince me,” he says.
Aperghis is a global banker who gained experience at investment banks JPMorgan Chase and Deutsche Bank, where he served in the mergers and acquisitions division. Since 2014, he has been running a financial advisory firm that assists multinationals, high net worth individuals and governments with mergers, acquisitions and IPOs. He advised, among others, Minister of Finance Jeroen Dijsselbloem (PvdA) on the IPOs of insurer ASR and ABN Amro.
This time with EFIC1, he is looking for a company with growth potential, preferably one that still operates under the radar. He ends up at Azerion.
The banker is impressed by the strategy and determination of the Lower Turkish Snip and Snap. “Azerion brings together digital entertainment and digital advertising, two growing worlds. It is also another founder-led company that is not funded by private equity. That is a unique proposition,” he says. Aperghis has something to offer the men. With EFIC1, he has 400 million in cash.
His proposal: if Azerion merges with EFIC1, Azerion will be listed on the stock exchange and thus have quick access to money to make acquisitions. The investors who invested in EFIC1 can piggyback on its success.
Also read: Dutch games company wants to go public with Miffy, Patience and 3D
Aytekin is skeptical. He prefers to go public on his own. Just before the arrival of Aperghis, the founders themselves raised 200 million euros with a bond loan on the stock exchange in Frankfurt.
Aytekin has become adept at seducing investors. In the summer of 2020, he already managed to raise 60 million euros in eight days in Scandinavia with asset managers and pension funds. “Fifty meetings in eight days. Stockholm, Helsinki, Oslo, Bergen, Copenhagen. We went everywhere. So we didn’t need a banker.”
Aytekin quickly became familiar with high finance, he says. „Three years ago we never had a bond [obligatielening] heard. Yes, only from James Bond.”
Azerion decides to continue working on an independent IPO without EFIC1 in order to further increase the acquisition cash. But along the way, the founders are becoming more aware of the risks of that route. “We were applying for a listing with the Netherlands Authority for the Financial Markets, but we did not yet meet all the conditions. When we saw in October 2021 that Coolblue last minute called off the IPO because sentiment was disappointing, Nick’s idea turned out to be a welcome alternative. If you have to cancel an IPO, you will be thrown back six months. We didn’t want that,” Aytekin explains.
Personal stories
As a result, Aperghis still gets a foot in the door, and he can do business with Aytekin and Akpinar. On December 13, the merger between Azerion and EFIC1 will be sealed.
Hectic days precede that. The team that has to close the deal will at some point consist of thirty people, who are connected to each other via Zoom from Amsterdam, Frankfurt and London. There are seven to eight employees at the Schiphol-Rijk location who will continue to work during the night of 12 to 13 December to prepare financial and legal details for the merger document.
“I went on until eight in the morning,” Aytekin says. He shows on his mobile the time when the agreement was signed: 07:59.
Aperghis is also present that night. “There was only a light in this building. We ate sandwiches and sometimes took a nap on the couch.”
Since the announcement of the merger, Aytekin has spent his working days in a communications center full of studio lights and TV screens. From there, he tries to entice investors in EFIC 1 to approve the merger: “Like Han Solo in a Starwars ship.”
With two investors in EFIC1, entrepreneurs Klaas Meertens and Wim de Pundert, Azerion is working together to convince other investors in EFIC1 to participate. The duo, who have become rich in caravan sales, have invested more than 40 million euros in EFIC1.
The founders see the fact that these two entrepreneurs want to share in Azerion’s risk as a recommendation. Aytekin and Akpinar will drive to Meertens’ country house in Umbria in Italy in May to talk to him and De Pundert about Azerion’s growth potential.
Aytekin: „We exchanged personal stories while enjoying a glass of wine. Wim is a real business builder. He told his whole story. It is important to me that I work with people who have also fought for their company. That gave us comfort. Everything has a financial side, but you also have to have a human click and views that match. If that doesn’t work, we’ll drop out.”
It wouldn’t be the first time: in 2017, Aytekin called off a takeover because the owner of a company to be incorporated showed little empathy after the death of Akpinar’s father.
Emancipating effect
Will the Azerion founders also cash in on the IPO? No, Aytekin says. Most of the money that comes in with it flows into the company. It will mainly be used for acquisitions.
Aytekin and Akpinar now jointly own 72.5 percent of Azerion. The rest is divided among the staff and the more than forty founders of previously acquired companies. With the IPO, approximately 33 percent will become freely tradable. ‘Only’ 20 million euros of the money raised by EFIC1 will go to the founders and staff of Azerion. Aytekin and Akpinar will each keep a stake of more than 20 percent after the merger.
Aperghis and Aytekin estimate that Azerion will be valued at 1.3 billion euros at the time of the IPO. There is a caveat to this figure. While banks screen a company during a regular IPO and thus arrive at an expected market value, this does not happen with a spac.
“I don’t care much for that money,” Aytekin says. What he finds more important is the emancipating effect of two Turkish boys who go public with a company. “I get text messages from students to come and speak. Ultimately, that gives me the most satisfaction.”