BBMF wants bank to go public

Nanjing-based BBMF''s CEO, Han Lian talks about his hot wireless gaming company, its unusual name and hopes of a second quarter Nasdaq listing.

What exactly is BBMF?

Lian: We're actually the largest wireless games factory in the world right now. Mobile phone gaming is about low costs and manufacturing in large quantities. This is the same principle as making rice cookers and white goods. This is what China does well and it suits the wireless gaming world. So we have 100 people in the company today and after the Chinese New Year that will rise to 130. We're manufacturing about 30 games per month, which is a sizeable number for the industry.

Is the company currently profitable?

We expect to be profitable this quarter and we will be publicly listed on the Nasdaq in the second quarter.

So you will be going for a listing without much of a profit track record? I ask this because many of the other companies in the China tech space that plan to list have multiple quarters of profitability.

Yes, however, these other companies do not have a strong track record in java games. When it comes to java games we have the longest experience and the largest leverage. We intend to launch 800 wireless games this year. That is one of the highest in the world. We have the lowest cost capability in the world. We've already done OEM work for some of our Korean partners in order to lower their cost. We do the same in Japan, producing games according to our partner's specs.

We can produce - right now - 30 games a month at world class standards. That will make us a major exporter, as well as a major player domestically in China.

How will you have 800 games if you are only producing 30 per month?

We are growing very quickly. By mid-year we should have over 200 people, and by year-end over 300. We also plan to do operationally-driven acquisitions.

We are basically a huge 'factory' in China and that puts us in a good position to do these operationally-driven acquisitions. I feel only we can do this because we have real expertise in this area. We are the first in China to be able to produce world-class wireless games at the lowest cost. That puts us in an advantageous position to acquire profitable channels overseas. It's like if I can make shoes more cheaply than anyone else, all I need to do is to buy up the Kenneth Cole shops in New York and start exporting my shoes through them. It's a simple model. Make it really cheap in China and sell it really expensive overseas.

Are you talking about buying content-makers overseas or distribution channels?

It could be a mixture of both. The thing about these companies is they have very high cost structures. We can scale them up very quickly.

We have 16 exclusive content partners in Japan and Korea and acquiring them will be our first move after we raise new capital.

Another key thing is that we have a strong shareholder base in Japan. Zaibatsu business families such as from Mitsubishi are investors as well as Naoya Harano, the chairman of Atlus. He is the inventor of the karaoke system as well of the photo-sticker machine. He is an entrepreneur creator. He owns a significant stake, which we will disclose upon our listing on Nasdaq.

These Japanese shareholders, for example, will help us with our acquisitions in Japan. A lot of Chinese companies have not been very successful buying up Japanese companies because of cultural reasons. That's why these respected individuals in Japanese society can help us broker these deals and make sure the acquisitions go through well. We can then leverage Japanese development capabilities and distribution channels to increase profitability.

Apart from the Japanese, are there venture capital funds involved in BBMF?

No. Most of our company is owned by key management. We have a band of brothers concept where we eat, work and live together. Every single management member has to invest.

Your chairman, Antony Yip is the son of Peter Yip. Is there a relationship with Chinadotcom?

No. The only relationship is they are father and son.

Why do you need more capital?

We need capital because we feel there are a lot of profitable acquisitions we can do. That is the key to leveraging our low cost advantage. More money lets us buy more distribution channels or more companies with niches that make very good games.

How much capital do you want to raise?

We are looking to raise $30 million to $50 million on Nasdaq and more in the latter half depending on how the market pans out.

Have you appointed a lead manager?

Not yet. We have an experienced merchant bank, which has been involved in Nasdaq listings and will help us select a lead manager. The firm is called Millennium Partners.

How much of the company are you looking to sell and at what valuation?

We estimate we will make $4 million of net profit this year and will sell 10% to 20%. I guess you can work out the math.

What does the name mean and how did it come about?

We're known in the local software industry as the Big Bad MotherF*****. It's hard to shake it off. Everyone in the industry knows us as that. The real name is BBMF, and it had no meaning and so people gave it the meaning Big Bad MotherF*****. I am pretty proud of this, frankly. In the gaming industry if you are a Big Bad MotherF***** you must make pretty cool games.

Are the games designed for sophisticated new colour handsets or for the old black and white phones?

It's mainly for colour handsets. However, we have also developed a multi-platform game where we don't single out handsets. An SMS-capable handset could play with a WAP handset or a GPRS connection. That means you can play the game with me even though I am using a five-year old phone and you have a colour Nokia handset. Of course, it would look a lot nicer on your handset and not so nice on mine. The key is it allows people to play together on one platform even though they have different types of handsets. And of course, if you have a PC you can play with that too. So it is adaptable to PCs, PDAs and phones.

Are these role-playing games?

One of the games is a role-playing one. But we target players from a wide area of interests. We don't only target those that are prone to play games but those that are not prone. So we have dating games, gambling games, card games, chess games and so forth. Within the games space we have shooting and arcade games as well as puzzle games.

How do dating games work?

We have the exclusive right to a dating game from Korea. It is a multi-player game in real time that you play with real boys and girls. The game is based on a bunch of psychoanalysis questions developed by psychologists. The game therefore matches partners, and hooks up people with the same interests.

What is the revenue model?

It is a subscription based game where you pay by the month.

And it is targeted at China?

We are going to launch it in China. We have an exclusive agreement with for java games, which we supply from Japan and Korea. The first batch of games - which will be a mixture of action, shooting and RPG games - is now available.

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