The company, which is expected to be valued at between pounds 45m and pounds 55m, is seeking a full listing on the London Stock Exchange in July. Gremlin hopes the move will multiply profits by enabling it to use the flotation proceeds to fund an increase in the number of games it releases each year from six to around 15.
Profits for the nine months to the end of April were pounds 2.5m, achieved from sales of more than pounds 11m.
Ian Stewart, joint chief executive, said the flotation would also allow the company to continue on the acquisition trail at the same time as developing its products. He said: "We'd grown everything organically up to this point. The flotation does give us the opportunity to sustain our continual growth, to fund the development of the acquisitions we've already put in place, and to allow staff to own part of the company."
Gremlin has been active on the acquisition front in the past year, with the purchase of Dreamweavers, a video games outfit, last December, and DMA Design, a software development company, two months ago. Mr Stewart said he hoped to look at other software developers before the year was out.
The flotation will see the creation of around 25 jobs in the Sheffield head office within the next 12 months, according to Mr Stewart. Mr Stewart started Gremlin with his wife Jenny 11 years ago. They will between them retain 40 per cent of the group's shares.
Julian Morse, analyst at Beeson Gregory, the stockbroking firm that is handling the flotation, said Gremlin had benefited from rising penetration of Personal Computers in the home. He added that the company had managed to upstage some of its competitors by developing games for a variety of different platforms, including PCs, Sony Playstation and Nintendo 64.
Gremlin's best-selling games are Premier Manager 97 and Actua Soccer, both of which were released within the last five weeks.