Razer launches Hong Kong's first eSports IPO

High-flying online gaming company opens a new sub-sector for Hong Kong’s stock market, paving the way for more eSports companies to list in the future.

Hong Kong is often criticised for being less receptive when it comes to innovation and new technology, but the city’s equity market is bucking that trend. 

Ahead of the weekend announcement by the International Olympic Committee that electronic sports might yet play a role in future Olympics, gaming hardware maker and lifestyle brand Razer officially kicked off an initial public offering to raise as much as HK$4.2 billion ($545 million) on Thursday. 

It is the second high-profile technology company poised to join the Hong Kong stock exchange (HKEx) in two months after ZhongAn Insurance, China’s first internet-only insurer, completed a $1.5 billion IPO in September to become the first major fintech company to list in Hong Kong.

But it is arguably a more impressive coup for Hong Kong as San Francisco-headquartered Razer briefly sought a public listing in the US in 2014 and could have also listed in Singapore, the hometown of co-founder and chief executive Min Liang-Tan.

Apart from boding well for future technology listings in Hong Kong, Razer’s looming IPO is a sign of support for the city’s efforts to build an eSports community. 

Hong Kong is lagging behind the likes of South Korea and China when it comes to eSports development. However, the government has lately shown something of an interest in the rapidly growing industry and organised the city’s first eSports and music festival in August.

Razer’s IPO is also important to Hong Kong's stock market as it opens up a new sub-sector under the entertainment industry, opening the door for new businesses also riding the boom in online gaming.


Pre-greenshoe, Razer will be selling 1.06 billion shares at HK$2.93 to HK$4 per share, which is equivalent to 12% of its enlarged share capital. It could issue an additional 159.5 million shares by fully exercising a 15% over-allotment option.

Based on the indicative terms Razer will command an implied valuation of $3.3 billion to $4.55 billion pre-shoe and $3.4 billion to $4.6 billion post-shoe. In either case, the valuation could be deemed quite lofty considering that the company did not make a profit during the tracking record period between 2014 and 2016.

In an interview with FinanceAsia, Razer's Min-Liang Tan said the company -- which mainly produces gaming hardware such as laptops, mice, and keyboards -- has yet to fully monetise some of its products and services, particularly its software offerings such as virtual credit zGold and e-payment system RazerPay.

Syndicate analysts are not expecting Razer to turn profitable soon and are using estimated sales figures as the official valuation guidance. It will be valued at 3.8 to 5.2 times consensus sales next year, or 3.2 to 4.5 times on an enterprise value/sales basis, according to a source familiar with the situation.

Razer has secured $153 million worth of cornerstone investment – equating to 32.3% of the IPO size pre-greenshoe – from five investors including individuals Chen Huaidan ($50 million) and Loi Keong Kuong ($30 million), Davinia Investment ($33 million), Kingkey Enterprise ($20 million), and GIC Private ($20 million).

Davinia Investment is an investment vehicle owned by Indonesia’s Hartono family, owner of the country’s biggest clove cigarette maker Djarum. Kingkey Enterprise is a privately-held Chinese company and a financial backer of Chinese photo app and mobile phone maker Meitu.

It is worth noting that the investment by the Government of Singapore Investment Corporation, through GIC Private, is the sovereign wealth fund’s first public investment in a Hong Kong IPO in nearly three years. GIC’s last investment was in CGN Power’s IPO in December 2014.

Razer’s IPO pricing is slated for November 6 and the listing is expected on November 13.

Credit Suisse and UBS are joint sponsors of the share sale while CICC, CMB International, ICBC International, and UOB are joint bookrunners.

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