The creators of a popular app that launches cartoon pigs is now launching towards something else—an IPO worth more than $1 billion.
Finnish mobile game and animation studio Rovio Entertainment Ltd launched its IPO this week with a valuation of almost €900 million, or $1.1 billion. The company announced that its public offering would stand at €10.25 to €11.50 per share, equivalent to $12.24 to $13.73 or £9.06 to £10.16 and that it would put 37 million shares up for sale.
Money raised from the public offering, which the company hopes will be around €30 million, will help advance Rovio’s growth strategy, especially with potential acquisitions and employee compensation. The much-anticipated and long-awaited move will also provide increased visibility to the company and help it spread its name to the rest of the world.
“We believe that the contemplated listing will strengthen Rovio’s brand recognition and brand awareness,” said Mika Ihamuotila, chairman of the board.
Roler Coaster Profits
The popular Angry Birds app was first introduced by Rovio in 2009 and quickly became a huge success with more than 3.7 billion downloads. However, the success began to fade as Rovio was slow to respond to shifts in video game trends to free purchase games that make money from in-game purchases. After years of falling earnings, the company was forced to cut jobs and restructure, letting go of a third of its employees in 2015.
Rovio became profitable again in 2016 as game sales recovered and it released the Angry Birds Movie in 3D. Revenue in its most recent quarter increased 94%, with nearly three-quarters of the growth coming from the gaming business. The movie grossed $350 million worldwide and is expected to lead to increased revenue throughout 2017 and 2018, as well.
While the $1 billion valuation may seem huge, it is far below the $2 billion-plus that investors had previously hoped for and that had been reported by experts in the media in the early speculation stage. However, some experts questioned whether Rovio would really be able to offer such a large amount of money.
“If it had been as rumoured, it would have been way too high,” said one analyst. “Looking at sales, the valuation pits Rovio at the same level as its peers but includes profit growth expectations.”
Rovio is 70% owned by Kaj Hed, the uncle of the company’s co-founder, Niklas Hed. Venture firms Accel Partners and Atomico, among others, are also investors. Dutch holding company Trema International, another owner of the company, will also market a portion of its shares. Rovio will list its shares in Helsinki under the ticker ROVIO with the pre-list on September 29 and the official list on October 3.
Rovio’s long-awaited jump to the public market could change the video game industry and mark a turning point for the company, especially as it tries to maximise on current success and profits.