Social gaming website Zynga has reportedly covered its initial public offering, potentially bringing corporate venturing backers Google and Transcosmos nearer to a payment for the company.
The company has reportedly garnered enough investors to go ahead with the flotation, according to news provider Bloomberg. The flotation is expected to come next week. Zynga did not respond to a request for comment.
US-based search engine Google could make as much as an estimated 2.7 times return from its investment in Zynga, based on calculations by Global Corporate Venturing. Other corporate venturing units, such as Japan-based Transcosmos, are also in line for big returns, after taking shares in the online gaming company having sold its portfolio company Unoh last year.
Zynga filed for its initial public offering (IPO) in an amended S-1 with the US Securities & Exchanges Commission today, and is looking to raise up to $1bn from the release of 100 million shares. The shares will be priced between $8.50 per share and $10.00 per share.
The shares are set to make up an about 14.3% stake in the company, news provider the Wall Street Journal said, valuing the company at about $7bn. Google now holds 4.1% of Zynga’s shares, which will go down to 3.8% as part of the flotation, valuing its stake at approximately $270m.
Zynga has raised more than $845m from its three funding rounds, including a $490m series C round in which Google was reported to have invested more than $100m.
Underwriters Morgan Stanley, Goldman Sachs, Allen & Company, Merrill Lynch, Barclays Capital and JP Morgan Securities will have the option of buying an extra 15 million shares.
Founder and chief executive officer Mark Pincus is still the largest shareholder, owning 16%, while other significant shareholders include venture capital (VC) firms Kleiner Perkins Caufield & Byers (11.2%), VC firms Institutional Venture Partners and Foundry Venture Capital (6.1% each), and VC funds Avalon Ventures (6.1%) and Union Square Ventures (5.4%).
Zynga’s investors also include Russia-based e-mail site Mail.ru, investment firm Digital Sky Technologies which used to be a Mail.ru subsidiary, investment manager Tiger Global, private equity firm Silver Lake Partners and Japan-based marketing chain management company Transcosmos, which is one of the largest global corporate venturing units. Transcosomos sold portfolio company Unoh to Zynga to help the US company expand into Japan and an insider said it would make a four-times return from its about1% holding.
Zynga’s revenues, which depend on players paying money to buy items which are transferable to their range of free-to-play games, continue to rise – reaching $597.4m for 2010 and $828.8m for the nine months up to the end of September this year.
