UK-based Codemasters is set to announce a stock market flotation, valuing one of the country’s oldest video games developers at £280m and providing a multimillion-pound payday to investors.
On Tuesday, the Warwickshire-based group will announce its intention to list shares on Aim, London’s junior market, intending to raise about £160m for India’s Reliance Big Entertainment, its majority shareholder, which has also invested in global media groups including the Hollywood movie studio DreamWorks.
A group of company directors and senior management, including chief executive Frank Sagnier, will earn about £10m from the listing, with £15m also raised for the company to invest on expanding its games offerings. Shares are expected to be listed on Aim on June 1.
Founded in 1986, the group focuses on the development of motor racing games, such as the Colin McRae series of rally racing titles, as well as having the exclusive rights to games based on Formula One, the global supercar series.
Codemasters has 500 employees across three locations in England, with a further production facility in Kuala Lumpur, Malaysia. Its current successes include the DiRT and GRID racing franchises.
A decade ago, the group had to abort plans for an initial public offering following concerns about a highly indebted balance sheet.
According to its latest filing in Companies House, in the year to March 31 2017, the company made a loss of £9.9m despite growing revenues because of the investment in research and development and interest payments related to £124m in debt owed to Reliance. The group believes the IPO will make it debt free.
Codemasters said it intended to capitalise on what described as a “golden era of growth” for the video games industry with investors seeking routes into a fast-growing sector. Newzoo, a market research firm, suggested the global gaming market would be worth $143.5bn by 2020.
“We believe that racing games will continue to be a strong market segment, and our admission to Aim will provide us with the opportunity to further build on our expertise and capabilities in creating premium quality racing games,” said Mr Sagnier.