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UPDATE 1-DNEG, visual effects studio behind "Tenet", to go public in $1.7 bln SPAC deal

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(Adds transaction details, background)

Jan 25 (Reuters) - DNEG, the Oscar-winning Hollywood visual effects studio behind Christopher Nolan's "Tenet", said on Tuesday it would list in New York through a merger with a special purpose acquisition company in a deal valuing the combined entity at about $1.7 billion.

The company, which has also worked on popular movies "Inception", "Avengers: Endgame" and "Mission Impossible: Fallout", has received six Oscar awards for visual effects.

The deal with Sports Ventures Acquisition Corp will provide DNEG with up to $400 million in gross proceeds, including $168 million in private investment in public equity, or PIPE.

Formerly known as Double Negative, London-based DNEG was acquired by India's Prime Focus Ltd in 2014. It has studios in England, Canada, the United States and India.

DNEG had earlier considered other traditional options to go public. The company was looking to list in London through an initial public offering (IPO) in 2019, according to a media report https://www.reuters.com/article/us-dneg-ipo-idUSKCN1UE1HN.

SPACs are publicly-listed companies formed with the intention of merging with a private company at a later date. For the company going public, a SPAC merger serves as an alternative to a traditional IPO.

Sports Ventures was focused on finding a target in the sports, media and entertainment sectors. It had raised $230 million through an IPO in January last year.

The combined company will be led by DNEG Chief Executive Officer Namit Malhotra and will list on the Nasdaq. The deal is expected to close in the first half of this year. (Reporting by Sohini Podder and Manya Saini in Bengaluru; Editing by Maju Samuel and Saumyadeb Chakrabarty)