South Korean-headquartered gaming publisher and operator Nexon may be positioning itself to convert its value in free-to-play games into a major financial windfall. The company has hired investment bankers Morgan Stanley and Goldman Sachs Group Inc. in a preliminary step before moving to a public offering or a large private fundraising round, according to inside sources.
Nexon has also been meeting with U.S. investors, such as T. Rowe Price, Fidelity Management, and Capital World Investors, but hasn’t arrived at a precise valuation of the company or any particular direction to pursue in raising capital. The valuation of the company may be in the multibillion dollar range. This is not a far-fetched number when considering that Nexon’s value rose 56 percent to $648 million in 2009 and neared the $1 billion revenue mark, based on inside opinion.
Considering the fast-growing market for Web and social games and the favorable fundraising climate for companies heavily involved in these market segments, Nexon’s timing appears to make perfect sense. Zynga is perhaps the most prominent example of a game company making the most of their timing and success thus far. Buoyed by a massive monthly audience of 250 million players of their social games, Zynga recently raising $500 million in a private fundraising round that estimated the value of the company as high as $10 billion. On a larger scale, the global virtual goods market, in which Nexon’s games are strongly focused, is expected to jump 36 percent to $12.58 billion from $9.28 billion in 2010, according to brokerage ThinkEquity.
[Source: Wall Street Journal]
