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 (IPO) at US$7.6 billion.
Demand for the shares has boosted King’s valuation by US$2 billion in less than a month. Analysts had pegged the company’s worth at US$5.5 billion last month, but King said on Wednesday its shares would be priced at between US$21 and US$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 percent stake could be worth as much as US$745 million, and the Derbyshire entrepreneur Mel Morris, who owns a 12.2 percent interest. The company’s 11-strong management team own shares that could be worth up to almost US$2.2 billion.
The investment is also one of the most successful ever for the British private equity firm Apax, which in 2005 invested about US$63 million and now owns more than 48 percent of the shares, making its holding worth nearly US$3.5 billion.
King has revealed that it intends to sell a minimum of 22.2 million shares in the flotation, raising US$530 million in total, of which about US$326 million will be kept by the company to invest in expanding its operations around the world.
However, Britain is unlikely to benefit from King’s success, because the company relocated to Ireland last year. The role of its British subsidiary, which uses offices near Tottenham Court Road in central 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 past five years, making nearly US$570 million after tax last year on revenues of US$1.88 billion.
Last month, an average of 144 million people were daily active players of King games, reorganizing brightly colored 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 color, have proved highly addictive, with King notching up more than 1.4 million plays a day.
King’s valuation, which is based on 315 million shares priced at US$24, comfortably outstrips that of fellow games company Zynga, which was worth US$7 billion at its 2012 stock market flotation, but has seen its fortunes go into reverse.