It's game on for Zynga IPO
Zynga is expected to price its IPO on December 15, in one of the most highly anticipated IPOs of the year.
Zynga plans to file terms on Friday for an IPO that would generate around US$900m, based on aUS$8-$10 indicative range and an initial float of 10%. The offering is targeting a valuation of US$10bn, according to two sources close to the process.
That valuation is below the US$12bn-$13bn that Zynga is valued in the private markets, as well as the US$14.05bn internal valuation in the company’s latest prospectus. A conservative valuation seemingly is designed to attract investor interest and ensure a successful outcome.
Morgan Stanley and Goldman Sachs are lead bookrunners on the deal, with Bank of America Merrill Lynch, Barclays Capital, JP Morgan and Allen & Company also named in the syndicate. The banks are opting for a standard nine-day roadshow, paving the way for a Nasdaq debut on December 16, a Friday.
Though the US$900m figure is shy of the US$1bn sum Zynga originally registered for, underwriters could ultimately upsize the deal based on demand. Underwriting committees at the banks involved are meeting in the coming days to finalize their participation in the offer.
Apart from Facebook, Zynga is seen by many investors as one of the most attractive companies among the recent wave of social media related offerings.
A 10% free float is now considered standard for these types of offerings but is more than that offered in the recent IPOs of Groupon and LinkedIn, both of which have traded in a highly volatile fashion in recent weeks due to technical factors.
Chief Executive Officer Mark Pincus will lead presentations to investors, along with Chief Operating Officer John Schappert and Chief Financial Officer David Wehner.
Zynga’s games have 54m daily active users and 227m monthly active users in 175 countries, mostly via games on Facebook.
The company, which rose to prominence on viral games such as “FarmVille” and “Mafia Wars”, is on track to become one of the fastest Silicon Valley companies ever to turn over more than US$1bn a year in revenue.
Founded in 2007, Zynga increased its annual revenue from US$19.4m in 2008 to US$597.5m in 2010, and generated revenue of US$828.9m in the nine months to September 30, 2011. Over the same period, net income was US$30.7m and adjusted Ebitda US$235.5m.
