Angry Birds maker plans IPO that may value it at $2bn

2017-09-05 14:44 - By Ville Heiskanen and Ruth David, Bloomberg
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London - Angry Birds maker Rovio Entertainment Oy plans to sell shares in a Helsinki initial public offering, seeking funds to support its resurgence seven years after releasing its best-selling mobile-game title.

Main owner Kaj Hed, 62, and some other holders will sell shares, and Rovio will offer about $36m of new stock, the company said Tuesday, without providing a total value for the sale. The IPO could value the maker of the Angry Birds mobile games and movie at about $2bn, people familiar with the matter said last month.

Rovio has emerged from a slump after changing the way it charges for game playing, and an IPO gives CEO Kati Levoranta ammunition to develop new titles. The listing is set to test investors’ appetite for entertainment software, a group whose shares have barely budged from their offer prices following IPOs this year, according to data compiled by Bloomberg.

READ: Angry Birds CEO's ‘games first' plan pays off as sales rebound

Mobile-game makers often struggle to replicate the success of initial blockbusters. King Digital Entertainment, the creator of Candy Crush, was acquired in 2015 for a 20% discount to its IPO price amid revenue declines. And Netmarble Games, the maker of the Lineage and Stone Age mobile games - and South Korea’s biggest listing in seven years - has declined about 4% since its shares started trading in May.

A $2bn valuation would translate into a $1.4bn fortune for director Hed, according to the Bloomberg Billionaires Index. He holds about 69% of Rovio after investing 1 million euros more than a decade ago into the company co-founded by his nephew Niklas Hed.

READ: Angry Birds maker said to plan IPO at $2bn value

Proceeds from an IPO could also help the company fund the “Angry Birds Movie 2,” planned for 2019. The company’s first film in the franchise, released last year, made about $350m in worldwide box-office sales.

Rovio, based in Espoo, Finland, last month reported second-quarter revenue growth of 94% to €86.2m, with the games business increasing sales 65% to €61.3m. The company is benefiting from a new strategy that places more focus on in-game purchasing and advertising instead of paid downloads.

While the various Angry Birds versions have been downloaded billions of times, Rovio’s other titles have yet to match that success. The company’s biggest money-maker is now Angry Birds 2, a follow-up to the original title which became the best-earning app in Apple’s US store in 2010. New titles launched this year include Battle Bay and Angry Birds Evolution.

“All of our recent launches - Angry Birds Evolution, Battle Bay and Angry Birds Match - have shown better performance in key performance indicators than any previously launched Rovio game, thus suggesting additional growth potential ahead,” Levoranta said in a statement.

While Rovio didn’t give details of the planned IPO’s total size, it could be valued at about $400m, people familiar with the matter said last month. That would make the IPO the biggest in Helsinki since the listing of wireless carrier DNA Oyj last year.

Carnegie Bank, Danske Bank and Deutsche Bank are among banks arranging Rovio’s IPO.

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