Chinese-owned gaming business completes $1.9b IPO
Playtika, an Israel-headquartered social and mobile games company that was acquired by a PE-backed Chinese consortium in 2016, gained 17% on its US trading debut following a $1.88 billion IPO.
The company sold 69.5 million shares for $27 apiece, above the indicative range, according to a prospectus. BlackRock, Dragoneer Investment Group, and Tiger Global Management purchased $600 million in shares concurrent to the offering at the IPO price. The stock opened at $33.40 on January 15 and briefly surpassed $36 before falling back to close at $31.62. This gave Playtika a market capitalization of approximately $13 billion.
The offering comprised 18.5 million in new shares and 50.9 million shares held by Playtika Holding UK II, the original acquisition vehicle, which retains a 79.8% stake in Playtika. The owners of Playtika Holding UK II include Yunfeng Capital, Hony Capital, the wealth management platform of CDH Investments, and Giant Interactive, a Chinese online gaming company.
Playtika was a division of Caesars Interactive Entertainment (CIE), which was purchased by the Chinese consortium for $4.4 billion in cash. CIE was used by Caesars Entertainment Corporation as a holding company for interests such as "World Series of Poker," regulated online real money gaming businesses, and social and mobile games.
The company claims to own some of the most iconic free-to-play mobile games in the world, including nine that feature among the top 100 highest-grossing titles in the US based on Apple App Store and Google Play Store in-app purchases. In addition to “World Series of Poker,” it is known for “Slotomania,” “Caesars Slots,” “Bingo Blitz,” and “Solitaire Grand Harvest.”
Playtika builds out its portfolio through acquisitions. Steps are taken to enhance the scale and profitability of newly purchased games by leveraging the company’s live operations services and technology platform. This is intended to allow game studios to dedicate more of their time to creating content and maintaining a high level of user experience.
More than half of revenue comes from casino-themed titles, while the top nine games are responsible for more than 97% of revenue. During the nine months ended September, Playtika had an average 35.2 million monthly active users and 11.4 million daily active users. These users make in-app purchases of virtual currency and other items. In-app advertising is another revenue source.
The company posted $1.89 billion in revenue for 2019, up from $1.49 billion the previous year. Over the same period, net income fell from $338 million to $288.9 million. For the nine months ended September 2020, revenue and net income were $1.79 billion and $16.1 million.
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