Gamer iDreamSky raises $115m

Mo­bile app sells 7.7m shares in day 1 on Nas­daq

China Daily (Canada) - - ACROSSAMERICA - By JACK FREIFELDER in New York jack­freifelder@ chi­nadai­lyusa.com

iDreamSky Tech­nol­ogy Ltd, one of China’s largest in­de­pen­dent mo­bile game pub­lish­ing plat­forms, went pub­lic on Thurs­day at the Nas­daq Stock Ex­change, rais­ing more than $115 mil­lion.

Man­agers of iDreamSky’s ini­tial pub­lic of­fer­ing sold 7.7 mil­lion Amer­i­can de­posi­tary shares (ADS) at $15 each, above the mar­keted range of $12 to $14 a share. Trad­ing un­der the sym­bol “DSKY”, the shares opened at $15 and hit a high of $19.05 in the early morn­ing be­fore even­tu­ally clos­ing at $15.94, up 94 cents, or 6.3 per­cent.

“Four years of hard work and pas­sion from our team mem­bers is how we got here, and this IPO is one of the most im­por­tant mile­stones for iDreamSky’s growth,” Michael Chen, iDreamSky’s CEO and co-founder, said through a trans­la­tor in an ad­dress be­fore Thurs­day’s open­ing bell. “We have to work hard be­cause this is just the open­ing chap­ter in a new age for iDreamSky.”

Ac­cord­ing to iDreamSky’s IPO prospec­tus, the com­pany said it would use more than $80 mil­lion of the money raised from the of­fer­ing to explore po­ten­tial ac­qui­si­tions, but no specifics have been re­leased.

Jun Zou, chief fi­nan­cial of­fi­cer, said Nas­daq is a “nat­u­ral fit for a tech­nol­ogy com­pany”, es­pe­cially be­cause of its re­search and news ser­vices, as well as the ex­change’s “solid af­ter-mar­ket sup­port”.

“What we looked at was not just where we listed, but also the in­tel­li­gence that we can get to un­der­stand in­vestors and the mar­ket bet­ter,” Jun said in an in­ter­view with China Daily. “A $1 dol­lar raise be­yond the (mar­keted) range is def­i­nitely very en­cour­ag­ing for us, but is also puts some pres­sure on us as well. If our story has been well re­ceived, now we need to re­ally work hard to de­liver.”

iDreamSky, founded in 2009, is the largest mo­bile game pub­lisher in China with nearly 100 mil­lion monthly ac­tive users (MAUs), ac­cord­ing to data from Analysys In­ter­na­tional, a lead­ing Chi­nese In­ter­net mar­ket re­search firm.

With head­quar­ters in Shen­zhen, Guang­dong province, the com­pany de­liv­ers mo­bile games to its au­di­ence in China by work­ing with third-party soft­ware de­vel­op­ers to tweak games for the Chi­nese mar­ket.

iDreamSky con­trols close to 40 games in its port­fo­lio, and three of the top 10 ca­sual games in China: the “Tem­ple Run” se­ries, “Fruit Ninja” and “Sub­way Surfers”.

Jeff Lyn­don, pres­i­dent and co-founder of iDreamSky, said: “We al­ways say games are a ser­vice. It’s not like it was be­fore when you made a game and put it on the shelf, so it’s a very dif­fer­ent mar­ket that is go­ing to breed out from the mo­bile side.”

“Now you ac­tu­ally need to build a long-term re­la­tion­ship with cus­tomers,” he added. “The US has a lot of great in­no­va­tive tech­nol­ogy on user an­a­lyt­ics and un­der­stand­ing back­end ser­vices, and the only way you can keep cus­tomers is by un­der­stand­ing them. That is go­ing to change the dy­namic of the mar­ket.”

Man­ag­ing the deal for iDreamSky were JP Mor­gan Se­cu­ri­ties LLC and Credit Suisse Se­cu­ri­ties.

The com­pany has also se­cured sev­eral con­cur­rent pri­vate place­ment deals that could bring the to­tal raised from the of­fer­ing to more than $140 mil­lion.

iDreamSky is the lat­est Chi­nese com­pany to go pub­lic in the US this year, a list that in­cludes nearly 20 com­pa­nies, ac­cord­ing to Bloomberg News.

On June 24, Xun­lei Ltd, one of China’s largest dig­i­tal me­dia providers, raised close to $88 mil­lion in an IPO on Nas­daq. And on May 22, e-com­merce gi­ant JD.com raised $1.78 bil­lion in the big­gest IPO in the US by a Chi­nese com­pany to date.

JD’s list­ing also gave the firm a foothold in the US mar­ket ahead of its much larger ri­val Alibaba Hold­ings Group Ltd, China’s No 1 e-com­merce firm. Alibaba’s IPO, ex­pected to be held later this year, could ex­ceed $20 bil­lion, ac­cord­ing to some es­ti­mates.

Joost van Dre­unen, CEO of New York-based Su­perData Re­search, a lead­ing provider of mar­ket re­search and in­tel­li­gence on free-to-play and dig­i­tal games, said the de­ci­sion for iDreamSky to put their foot on the ground in the US is “a very solid move”.

“I think it has a lot to do with just get­ting a foothold in the Western mar­kets in terms of con­sumer vis­i­bil­ity, but it also gives more trans­parency to­ward in­vestors,” he said. “If you’re al­ready one of the largest Chi­nese mo­bile pub­lish­ers, where do you go from there? There’s a lot of space for com­pa­nies that have done well in China, and the next step is of­ten en­ter­ing the Western mar­ket.”

The video game in­dus­try in China, which is mainly con­cen­trated in com­puter-based gam­ing, gen­er­ated rev­enue of $13 bil­lion last year, a 38 per­cent jump year-on-year, ac­cord­ing to a Jan­uary re­port from BBC News.

“There is still much room for the Chi­nese mo­bile gam­ing mar­ket to grow, and grow very rapidly,” said An­fer­nee Guan, an iDreamSky co-founder and the firm’s chief tech­nol­ogy of­fi­cer.

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JACK FREIFELDER / CHINA DAILY

Chi­nese mo­bile game pub­lisher iDreamSky Tech­nol­ogy Ltd lists on the Nas­daq in New York on Thurs­day. The com­pany raised $115.5 mil­lion in its ini­tial pub­lic of­fer­ing.

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