King Digital Entertainment, maker of smart phone game Candy Crush Saga, said late on Tuesday it priced its initial public offering at $22.50 per share — the midpoint of its expected $21-to-$24 price range — which would value the whole of the company at roughly $7 billion.
The shares are expected to begin trading on the New York Stock Exchange on Wednesday. Some investors said the fact the IPO was priced in the middle of the range reflects some concern that so much of King’s success is down to Candy Crush alone.
Nonetheless, King is one of the most valuable technology companies to go public in years. King's offering of 22.2 million shares would raise about $500 million at the IPO price.
In a regulatory filing, King did warn potential investors that “a small number of games currently generate a substantial majority of our revenue.”
The company said that in the fourth quarter of 2013, its top three games -- Candy Crush Saga, Pet Rescue Saga and Farm Heroes Saga -- accounted for 95 per cent of total gross bookings, with Candy Crush Saga accounting for 78 per cent.
“We must develop new games and enhance our existing games so that our players will continue to play our games and make purchases of virtual items within our games,” King said.
“Our continued growth will depend on our ability to regularly develop new games and enhance our existing games in ways that improve the gaming experience for both paying and non-paying players while encouraging the purchase of virtual items within our games.”
J.P. Morgan, Credit Suisse and BofA Merrill Lynch are lead joint book-running managers for the IPO.