Playtika Plans $1.6 Billion IPO Valuing Itself at up to $9.4 Billion

Posted on: January 7, 2021, 07:27h. 

Last updated on: January 8, 2021, 09:57h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Playtika, the Israeli mobile gaming company, updated a Form S-1 filing with the Securities and Exchange Commission (SEC) today. The filing said it plans to sell $1.6 billion worth of equity in a US initial public offering (IPO) valuing the firm at $8.6 billion to $9.4 billion.

Playtika IPO
Inside Playtika’s Israel headquarters. The company could be worth up to $9.4 billion in a US IPO. (Image: Haaretz)

Prior speculation indicated Playtika was eyeing a $1 billion IPO that valued the company at $10 billion. Founded in 2010 by Robert Antokol and Uri Shahak, the gaming enterprise will list on the Nasdaq under the ticker “PLTK.”

We are selling 21,700,000 shares of our common stock, and the selling stockholder, Playtika Holding UK II Limited, or Playtika Holding UK, is selling 47,800,000 shares of our common stock,” according to the SEC filing.

Playtika Holding UK is controlled by Chinese investors Giant Network Group Co. Ltd. and Yunfeng Capital. Yunfeng is a private equity group started by Alibaba founder Jack Ma. Ma recently drew the ire of Beijing following a failed IPO of his Ant Group fintech company. One of the richest men in Asia, Ma hasn’t been seen in public for two months, leading to speculation regarding his whereabouts. But it’s believed he’s not missing and opting to keep a low profile.

Following the Playtika offering, which is expected to be priced at $22 to $24 a share, the UK holding company will control 80 percent of the voting power, down from 96.7 percent. Antokol isn’t selling shares in the offering, and his stake following the transaction is estimated to be worth $220 million to $240 million.

Big Discount to a Rival

Playtika’s amended S-1 was released on the same day Roblox Corp., a maker of mobile and console games for children, raised $520 million in a new Series H private funding from venture investors. That valued the company at $29.5 billion. That company is planning a direct listing at a $30 billion valuation, more than triple the high end of the Playtika range.

For its part, Playtika is profitable, and according to the SEC document, it controls nine of the 100 highest-grossing mobile games in the US. Playtika, which has 27 million monthly users, offers games such as Bingo Blitz, Caesars Slots, and Poker Heat, in addition to WSOP social.

“We have a powerful combination of scale, growth and operating cash flow. In the twelve months ended September 30, 2020, we generated $2,286.2 billion in revenues, a net income of $46.1 million, and $815.2 million in Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), representing a net income margin of two percent and an Adjusted EBITDA Margin of 35.7 percent,” said the company in the S-1.

While internet casino and sports wagering operators are commanding plenty of attention, there’s obvious investor enthusiasm for mobile gaming companies. For example, Skillz Inc. (NYSE:SKLZ), a mobile gaming and esports provider, is less than a month removed from completing a merger with a special purpose acquisition company (SPAC) and going public. But that stock stock is up 15.52 percent over the past week and has a market capitalization of $6.49 billion.

Old Caesars Connection

A year after Playtika was found, it was acquired by Caesars Interactive, a unit of the famous casino operator, for $130 million. Hence the Caesars Slots offering.

When it came under financial duress and needed cash, the old version of Caesars sold Playtika to the aforementioned Chinese investors in 2016 for $4.4 billion.

That’s clearly an impressive return on investment. But at the midpoint of Playtika valuation range, the company is worth $9 billion, or more than half Caesars’ current market capitalization.