Gamer iDreamSky raises $115m
Mobile app sells 7.7m shares in day 1 on Nasdaq
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.
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.