MENU

Razer Expects To Go Public in October

Next month, local company, Razer, is set to sell its shares through an initial public offering (IPO) on the Hong Kong stock exchange in one of the most anticipated IPO in recent years.

Razer, a company that produces gaming laptops and other gaming hardware, is expected to raise about $400-500 million through the IPO. The money will be used to fund their research and development of a new mobile gaming device, which they hope, will cater to the hardcore gaming crowd.

Tan Min Liang and Robert Krakof founded Razer in 2005 as a gaming hardware company. They started out selling gaming accessories such as uniquely designed mice, which had special buttons that were designed for a smoother and faster gaming experience. Since then, they have expanded their product range to include laptops, desktops, keyboards and more.

Razer has had one eye on expanding through increasing their product offerings and by going global. In 2016, Razer bought assets from a company previously known as THX Ltd. And earlier this year it continued its acquisition spree when it obtained intellectual property from Nextbit systems, a mobile phone manufacturer.

Reuters reported that the company’s revenue grew to $392.1 million in 2016, from $319.7 million in 2015. However, the company’s losses expanded to $59.6 million in 2016 from $20.4 million in 2015. According to Reuters, at this IPO, Razer is looking at a valuation of between $3 billion and $5 billion. That puts its price-to-sales ratio at around 8 to 15 times that of 2016.

Razer has previously had success raising capital privately. Backers include recognisable names such as Hong Kong billionaire, Li Ka Shing, Temasek Holdings and venture capital fund IDG-Accel China Capital and Binary Capital.

The Foolish takeaway

Razer’s IPO is no doubt going to generate a huge amount of interest, considering the size of the company and the growth of the gaming industry. It is also a prominent brand among gamers who consider their products one of the finest in the industry. Investors who wish to purchase shares of the company should look out for their prospectus in the near future.

Meanwhile, for more (free!) investing insights, sign up here for your FREE subscription to The Motley Fool's investing newsletter, Take Stock Singapore. It will teach you how you can grow your wealth in the years ahead.

Like us on Facebook to keep up-to-date with our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.