EDINBURGH fantasy sports business FanDuel has further widened its equity base after $55 million of borrowings it took on in March last year converted to shares earlier this month.

A total of 45 investors bought into the convertible loan round, with existing shareholders Scottish Enterprise, Shamrock Capital, Tusk Ventures and Bullpen Capital all taking part.

Other names that were not previously associated with FanDuel but which have gained a shareholding in the company thanks to the loan notes converting to equity include US telecoms giant Verizon and American venture capitalists Greenspring Associates, KEC Ventures and Metamorphic Ventures (now known as Compound).

Verizon had already gained a foothold in the fantasy sports market in June thanks to its takeover of internet business Yahoo, whose Yahoo Sports site offers fantasy games based on American football, baseball, golf and auto-racing.

While Greenspring, KEC and Compound had not participated in any of FanDuel’s equity fundraising rounds it is possible that the latter two already held shares in the business as both were investors in esports company AlphaDraft, which was acquired by FanDuel in 2015.

At least 12 current and former FanDuel employees, including co-founders Nigel Eccles, Lesley Eccles and Tom Griffiths, also participated in the £55m debt round and so have seen the number of shares they hold in the business increase as a result of the conversion.

Despite this, the company’s founders and early investors have seen their proportional ownership of the company decrease in recent weeks thanks to a merger-termination clause that was agreed in January kicking in after FanDuel walked away from a proposed merger with rival DraftKings.

Though the companies announced their intention to merge in November last year, they abandoned the plans last month after facing strong opposition from US consumer-protection agency the Federal Trade Commission, which said it would be anti-competitive.

As a result private equity backers Kohlberg Kravis Roberts (KKR), which led a $275m fundraising for FanDuel in 2015, and Shamrock, which led its $70m round in 2014, have been awarded more shares while early investors have not.

This has resulted in the proportion of shares held by FanDuel’s private equity backers increasing from 54 per cent to 71 per cent.

At the same time the rights attached to other shares have been watered down, with half becoming deferred shares. That means they would rank at the back of the queue for repayment should the company’s assets ever have to be liquidated.

It is not clear what effect the debt-to-equity conversion has had on the total number of shares in issue, although FanDuel has recently filed a more up to date statement of capital with Companies House that is yet to become publicly available.

As part of the equity restructuring FanDuel’s board has also been reshaped to give more say to its private equity investors. Having been cut from 10 people to five, the board now features just one FanDuel representative – chief executive Mr Eccles – whereas previously it had three.

The other members are representatives of Piton Capital, Comcast Ventures, Shamrock and KKR, which have each led an equity funding round for the company.

FanDuel still has $25m of convertible notes in issue after raising the cash from California-based Hercules Capital shortly before announcing the DraftKings deal in November last year.

Under the terms of that loan agreement Hercules, which describes itself as “the largest non-bank lender to venture capital-backed companies at all stages of development”, has a floating and fixed charge over FanDuel’s assets.

FanDuel, which is run largely from the US, declined to comment.