The local operations of Razer Inc. could get a boost after the company’s planned initial public offering this week in China.
The closely watched IPO, which has attracted the attention of global investors, technology companies and the booming gaming sector, aims to raise about $528 million on the Stock Exchange of Hong Kong Limited and will carry a valuation in the neighborhood of $4 billion to $5 billion, as it starts trading next week.
The owners may have shortchanged themselves, according to published reports, the Razer IPO was more than 80 times oversubscribed by retail bidders.
“There’s a huge appetite in China for IPOs,” said Fadel Lawandy, director of the Hoag Center for Real Estate and Finance at Chapman University.
Razer has dual headquarters in San Francisco and Singapore. Its Irvine office at 9 Pasteur St. is the marketing and sales hub for North, Central and South America.
The company makes mice, laptops, audio products, keyboards and other accessories for gamers.
Razer established its 23,000-square-foot Spectrum office in July 2015 after moving the sales and marketing operation from Carlsbad, where the company got its start. The local operation employs more than 80 people, a figure that could rise following the IPO.
The company, in a 345-page prospectus, indicated it will use the proceeds to develop new product verticals in gaming and digital entertainment, such as mobile devices and audiovisual technology, as well as finance acquisitions, and boost research and development, marketing and sales, and general working capital.
It plans to launch the Razer Phone this week. The Android device is powered by Qualcomm’s Snapdragon processor and features a 12-megapixel camera.
Singapore entrepreneur Tan Min Liang established Razer in 2005 with Robert Krakoff.
That same year the company introduced its flagship Razer Diamondback gaming mouse, billed as the first of its kind for gaming.
A year later the company partnered with Microsoft to design and co-brand the Habu gaming mouse and Reclusa gaming keyboard, and sponsored its first esports team, Fnatic, in one of the industry’s first type of deals.
The company’s tagline is “For gamers. By gamers.”
Team Razer, its esports sponsorship arm, has grown to more than 400 individual players and 50 competitive teams, including the first professional “Hearthstone” player, Jeffrey “Trump” Shih.
“Hearthstone,” a free, collectible card game from Irvine-based Blizzard Entertainment Inc., has more than 70 million registered players worldwide, according to industry trackers. It was the world’s top digital collectible card game last year, racking up nearly $400 million in revenue, according to estimates from SuperData Research and MMOs.com.
The company was a lead sponsor at Blizzcon, the annual fan fest hosted by Blizzard this month at the Anaheim Convention Center (see technology column, page 26).
More Growth
Razer moved its U.S. headquarters in 2009 from Carlsbad to San Francisco.
Krakoff in 2014 relinquished his role as president to become an adviser, with the title of president emeritus. He now serves as president and founder of Murietta-based MINDFX Science, a maker of natural and organic vitamin supplements for athletes, college students, working professionals and gamers, according to his LinkedIn profile.
Razer has amassed a user base of more than 35 million through its Nabu wearable fitness tracker and Internet of Things platform; Razer Chroma, an LED technology; and Razer Cortex, a price comparison and informational portal dedicated to improving game performance, recording and streaming, according to its website.
Its Razer zGold service allows gamers to purchase virtual goods and items from over 2,500 different games.
The mix drove revenue last year to $392 million, up 23% from 2015. It posted a loss of $59.6 million, compared to a loss of $20.3 million in 2015.
Sales through the first six months of the year increased 30% to about $198 million, compared to the same period a year ago, according to regulatory filings.
The company has sold more than 25 million connected devices and over $1 billion in product hardware since its founding.
Razer has raised at least $175 million with lead institutional backers, including IDG-Accel, a joint venture between media giant International Data Group and Accel Partners; Intel Capital; Horizons Ventures; and China-based LianLuo, an affiliate of Hangzhou Liaison Interactive Technology.
LianLuo was formerly known as Beijing Digital Grid.
Redmount Ventures Ltd., owned by Hong Kong’s wealthiest businessman Li Ka-shing, owns a little over 1% of the company through a Series D investment, according to regulatory filings.
Lee Hsien Yang, the brother of Singapore Prime Minister Lee Hsien Loong, was among Razer’s first investors and is in line to make millions from his series A investment.
Razer’s corporate base in Singapore and deep roster of well-connected investors in Asia, according to Lawandy, likely tilted the company’s attraction to the Hong Kong exchange, which falls just outside the top five largest exchanges in the world ranked by combined market cap.
“The probability of going public on the Hong Kong exchange is much, much higher than going public in the U.S.,” he said.
Razer is expected to debut on the Hong Kong stock exchange’s main trading board on Nov. 13.
The company declined to comment for this story, citing an IPO quiet period.
