Candy Crush Saga developer to make history when it floats on stock market; Games studio King Digital will be Britain’s most valuable publicly listed internet company after pricing New York IPO at $7.6bn

Candy Crush Saga developer to make history when it floats on stock market

Games studio King Digital will be Britain’s most valuable publicly listed internet company after pricing New York IPO at $7.6bn

Juliette Garside

theguardian.com, Wednesday 12 March 2014 15.28 GMT

An average of 144 million people were daily players of Candy Crush Saga and other King Digital games in February 2014. 

King Digital Entertainment, the London games studio behind the mobile hit Candy Crush Saga, is to make history as the most valuable British internet company to join the stock markets after pricing its initial public offering at $7.6bn (£4.6bn).

Demand for the shares has boosted King’s valuation by $2bn in less than a month. Analysts had pegged the company’s worth at $5.5bn in February, but King said on Wednesday its shares would be priced at between $21 and $24 each when it floats on the New York stock exchange.

The popularity of King’s confectionery-themed smartphone and tablet game will make a multimillionaire of its chief executive, Riccardo Zacconi, whose 10.4% stake could be worth as much as $745m, and the Derbyshire entrepreneur Mel Morris, who owns a 12.2% interest. The company’s 11-strong management team own shares which at the upper end of the range could be worth almost $2.2bn.

The investment is also one of the most successful ever for the British private equity firm Apax, which in 2005 invested around $63m and now owns more than 48% of the shares, making its holding worth nearly $3.5bn.

King has revealed that it intends to sell a minimum of 22.2m shares in the flotation, raising $530m in total, of which about $326m will be kept by the company to invest in expanding its operations around the world.

The British taxman is unlikely to benefit from King’s success, however, because the company relocated to Ireland last year. The role of its British subsidiary, which uses offices near Tottenham Court Road in London, has been relegated to the “provision of management services to other companies” in the group, according to its accounts.

King makes its games available to download for free and raises most of its income from purchases made from within the app. The strategy has proved a lucrative one. King has been profitable for four of the last five years, making nearly $570m after tax in 2013 on revenues of $1.88bn.

In February, an average of 144 million people were daily active players of King games, reorganising brightly coloured sweets in Candy Crush, bursting their way through levels in Bubble Witch and lining up rows of fruit in Farm Heroes.

The games, which mostly involve clearing the screen by lining up three or more objects of the same colour, have proved highly addictive with King notching up more than 1.4m plays a day.

King’s valuation, which is based on 315m shares priced at $24, comfortably outstrips that of fellow games company Zynga, which was worth $7bn at its 2012 stock market flotation but has seen its fortunes go into reverse.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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