‘Exogenous risk': Clairvest CEO Ken Rotman calls money gaming ban a negative investment experience

Toronto-based Clairvest Group Inc. has written off its entire investment in Head Digital Works (HDW), parent of A23 following India’s sweeping ban on real-money online gaming. The move, enacted under the Government of India’s new gaming legislation Promotion and Regulation of Online Gaming Act,2025 rendered HDW’s real money gaming illegal, prompting a full shutdown of its business and a legal challenge to the regulation.

According to Clairvest’s financial statements for the quarter ended September 30, 2025, the firm recorded an unrealized loss of ₹7.6 billion (C$120.9 million) related to its investment in HDW, reducing the carrying value of the asset to nil. HDW had been one of Clairvest’s major gaming investments under its Clairvest Equity Partners (CEP) funds, particularly CEP V, which had significant exposure to the Indian gaming market.

The impairment followed the enactment of the Promotion and Regulation of Online Gaming Act, 2025, which bans all forms of real-money gaming and related facilitation services. The legislation—passed earlier this year—has forced multiple online gaming companies to suspend operations, dealing a severe blow to investors who had bet on India’s fast-growing skill-based gaming sector.

Clairvest said HDW has “shut down its operations and has challenged the validity of the legislation within all of its legal rights.”

“This quarter reflects both the opportunities and challenges inherent in our business. We were pleased to announce the signing of Northfield Park, which will mark our 14th land-based gaming investment once closed, building on a proven track record of success in land-based gaming with an aggregate multiple of capital of 5.2x across eight realized deals." said Ken Rotman, CEO of Clairvest.

Rotman said, "At the same time, we faced a material adverse regulatory change that is detrimental to Head Digital Works, a CEP V portfolio company. This was an exogenous risk beyond our control, and while such events are rare, they underscore the importance of diversification and disciplined investing. Based on our negative experience with Head Digital Works and other recent experiences investing abroad, we intend to concentrate our investing in North America going forward. We remain focused on staying closer to our proven investment strategy to deliver long-term value for our shareholders,”

The loss from HDW contributed significantly to Clairvest’s net investment loss of C$94.5 million for the quarter, compared with a C$38.6 million loss a year earlier. Gaming was the single largest contributor to this downturn, registering a C$119.6 million loss for the quarter as per its segment-wise reporting.

Overall, the firm’s net loss for the quarter stood at C$76.75 million, versus a net income of C$38.95 million in the same period last year. Corporate investments declined to C$877.3 million from C$942.9 million in March 2025, largely due to the HDW impairment.

Despite the setback, Clairvest maintained that it continues to manage and invest across its diversified portfolio, spanning sectors such as aerospace, renewable energy, medical practice management, and insurance services. The firm held C$118.5 million in cash and equivalents as of September 30, 2025, and reported no drawdowns on its C$100 million revolving credit facility.

The Indian gaming ban marks a major turning point for foreign investors in the country’s gaming sector. Over recent years, Clairvest and other global funds had increased exposure to India’s skill-based gaming startups, betting on high user engagement and strong revenue potential. However, with the blanket prohibition on real-money gaming, firms like HDW have been forced into a legal and operational limbo.

The impairment aligns Clairvest with a growing list of investors now reevaluating exposure to India’s gaming sector amid regulatory uncertainty. The firm said it will continue to monitor the outcome of HDW’s legal challenge and assess potential recovery opportunities, though it has written down the investment entirely for now.