Razer proposes to privatize the company to focus on fintech and software
The management of PC and peripherals maker Razer has officially announced plans to privatize the company at a valuation of HK $ 24.70 billion ($ 3.17 billion), reports Reuters. A group led by executives and a private equity firm cited plans to take significant risks in an attempt to seek new business opportunities in fintech and software as the reasons for the proposal.
Razer is a leading supplier of premium gaming PCs and peripherals. For the first half of 2021, the company reported record revenue of $ 752 million, an increase of 68% year-on-year and net profit of $ 31.3 million, compared with a net loss of 17.7 million dollars in the first half. from 2020.
The bulk of the company’s revenue ($ 677.3 million) came from sales of hardware, which includes some of the best gaming mice. In contrast, services Razer Gold and Razer Fintech ($ 72.8 million) much more profitable but risky as well as software companies ($ 1.9 million) accounted for a relatively small share of its profits.
“Right now, the hardware business contributes most of the company’s revenue, while other businesses are at a relatively early stage of development,” a statement from Razer said. As a Hong Kong listed company, however, the company is precluded from seeking opportunities in software and service segments which tend to be riskier and may have a negative impact on the company’s short-term profitability and the course of action. “
By privatizing the company, its management gains the flexibility to seize financial technology and software business opportunities.
âAs the company increasingly focuses on expanding into these emerging segments, the offeror believes that the successful implementation of the proposal will provide more flexibility for the group as a private company to implement its business strategies or pursue other business opportunities that may not be possible to pursue as a listed company, without being subject to regulatory restrictions and compliance obligations arising from the stock market listing and without focusing on the reaction of the short-term market. “
The group, led by CEO and creative director Min-Liang Tan and non-executive director Kaling Lim, who together own around 57% of Razer, as well as CVC Capital Partners, has offered to pay up to $ 10.79 billion. HK ($ 1.38 billion) to buy all the remaining shares that are traded on the Hong Kong Stock Exchange at HK $ 2.82 per share, reports CNBC. The price offered marks a premium of around 44% over Razer’s closing price on October 28, a day before it was revealed that the president was offering such a deal. After the proposal was announced, Razer’s shares fell to HK $ 2.46.
Razer went public in mid-2017 to raise $ 600 million for future growth.