The UK games developer behind the hit app Candy Crush Saga has stunned market-watchers by announcing it will be valued at up to $7.56bn (£4.55bn) when it lists on the New York Stock Exchange later this year – almost $2bn more than expected.
King, which has a major office near Tottenham Court Road in London but is domiciled in Dublin, yesterday announced a price of between $21 and $24 per share for its initial public offering, valuing it at $6.6bn to $7.56bn, much more than the $5bn initially estimated.
If King reaches the top end of its valuation the company will be worth more than FTSE 100 stalwarts such as the water utility Severn Trent, sugar giant Tate & Lyle and car insurer Admiral. King made a profit of $568m last year on revenue of $1.88bn, but its stock market filings admitted that 78 per cent of this came from its game Candy Crush Saga.
Commentators in the US press have expressed doubts over the longevity of the business given its reliance on the one game, with The Atlantic Magazine calling the company a "horrible investment". This week's New Yorker also called King "part of a venerable tradition: the one-hit wonder" and drew parallels to the disastrous float of the Facebook gaming firm Zynga in 2011.
Zynga was valued at $7bn on its debut, then the biggest tech float since Google's, but saw its value collapse as games such as Farmville declined in popularity. The company is currently worth $4.7bn.
Tech investors last night defended King's valuation, denying it would be a repeat of Zynga. One London-based venture capitalist said the company was not a "flash in the pan", pointing out: "It's more than a decade old and had been cash-flow positive since 2005."
The spreadbetting firm ETX Capital has been running a grey market for King, which ahead of yesterday's pricing announcement valued the company at between $6.82bn and $9.32bn.
Another London-based investor suggested that "with the resources as a public company King could be a long-term winner". The company is hoping to raise $533m from its stock market listing.
King was founded in 2003 by Riccardo Zacconi and Toby Rowland, son of the former Lonrho chief executive and Observer newspaper owner Roland "Tiny" Rowland. The company originally developed small-stakes gambling games for sites such as Yahoo and MSN, before launching games on Facebook and mobile.
The smartphone version of its hit Candy Crush Saga, launched in 2012, has been downloaded more than half a billion times.
Eleven executives and directors at King will be worth a combined $2.2bn if it achieves the top end of its valuation. Mr Zaccconi, the chief executive, stands to make up to $745m, while the chairman, Mel Morris, a former Derby County football club director, will make more than $870m.
The London venture capital firm Apax Partners' stake could be valued at up to $3.4bn while the investor Index Ventures will see its holding valued at as much as $599m.