Game relisting has been valued at £340 million. The British video games retail company says it will relist on the London Stock Exchange on June 11th, two years after the company went into administration. Game had been previously valued at £400 million. The lower price reflects recent investor fatigue on initial public offerings (IPO).
2014 has been one of the busiest ever as far as IPOs are concerned, after a long period of quiet. However, since a busy start to the year, fund managers and investors have become cautious after several newly listed companies’ stocks declined in value below their offer prices. Analysts have complained that too many IPOs have been launched at very high prices.
FatFace, the UK fashion chain, withdrew from its London float in May, citing poor market conditions. It had planned to raise £110 million to repay debt.
Went into administration two years ago
In March 2012, Capcom, Electronic Arts, Nintendo and several other suppliers refused to supply Game with their latest products due to concerns regarding the company’s creditworthiness. On March 26th, 2012, the company entered administration and one week later was bought by OpCapita subsidiary Baker Acquisitions. Baker Acquisition was renamed Game Retail Ltd.
Before going into administration, Game had 610 stores in the United Kingdom and traded under the Gamestation and Game names. OpCapita implemented a cost-cutting program and closed down 277 shops. Today it has 560 stores in the United Kingdom and Spain. Its revenue in the year ending in January 25th, 2014, was £816 million.
Game said that in 2013 it had a 33% share of the British market in new video-game content, accessories and hardware, plus 35% of Spain’s. The UK-Spanish video gaming market was worth £4.7 billion last year, and will reach about £5.8 billion in 2016.
35% of Game on sale
Stocks will be offered at 200 pence for each of the 60,409,046 ordinary shares. The flotation is forecast to raise approximately £121 million. Most of the cash raised will go to Game’s selling shareholders. The £20 million that the company itself will receive will go towards buying new stock and expanding its digital games content.
CEO of Game Digital PLC, Martyn Gibbs, said:
“Game Digital is a profitable and cash generative business with a great team, strong supplier partnerships and exciting digital growth opportunities. These fundamentals have enabled us to attract high quality investors who we welcome into our business.”
“We are a truly specialist retailer, with a loyal customer base, operating in a growing market. Our supplier partners are producing increasingly advanced gaming content, for which we will continue to develop and facilitate new ways to buy and play. The business is well-place for the future.”