Zynga files to raise $1 billion in public offering
Zynga Inc., the social-gaming company known for “FarmVille” and “Texas HoldEm Poker,” filed to raise $1 billion in an initial public offering, letting investors bet on the surging market for virtual goods.
The IPO will be managed by Morgan Stanley, Goldman Sachs Group Inc., Bank of America Merrill Lynch, Barclays Capital, JPMorgan Chase & Co. and Allen & Co., according to a regulatory filing today. The company didn’t say how many shares it would sell or at what price.
Zynga, which leads the market for games played on Facebook Inc.’s site and other social networks, is joining the biggest wave of Internet IPOs since the dot-com heyday in 2000. LinkedIn Corp., Pandora Media Inc. and Yandex NV all went public in the past two months, and other Internet companies such as Groupon Inc. aim to benefit from the rebound with their own IPOs.
Zynga said it has more than 232 million monthly active users, making it the biggest developer of social games. The company owns the four most popular apps on the Facebook’s site: “CityVille,” “Empires & Allies,” “FarmVille” and “Texas HoldEm Poker,” according to research firm AppData.com.
The games are free to play, with the company making money by selling virtual goods -- say, a tractor for “FarmVille” -- and letting players pay to reach higher levels. The worldwide virtual-goods market is expected to more than double to $20.3 billion in 2014, from $9.28 billion last year, according to ThinkEquity LLC, a San Francisco-based research firm.
Zynga has acquired at least 10 companies in the past year, helping it expand beyond Facebook games and into smartphone apps. The company bought Newtoy Inc., the maker of “Words With Friends,” in December. Four months later, it acquired Wonderland Software, creator of the game “GodFinger.”
Zynga is valued at $15.4 billion on SharesPost Inc., an exchange that connects buyers and sellers of privately held companies. That would make it the most valuable U.S. game company, ahead of Activision Blizzard Inc. and Electronic Arts Inc. Zynga recently hired former Electronic Arts Chief Operating Officer John Schappert for a senior role.
Zynga is backed by venture firms Foundry Group, Union Square Ventures, Kleiner Perkins Caufield & Byers, Institutional Venture Partners and Andreessen Horowitz. Russia’s Digital Sky Technologies and Google Inc. are also stakeholders.
