Video game developer and publisher Codemasters (CDM:AIM) is setting a frantic early pace in debut AIM dealings. Shares in the Warwickshire-headquartered business have raced the best part of 30% higher in early trading from their 200p issue price, currently changing hands at 257.5p on Friday.
Steered by CEO Frank Sagnier (pictured below), Codemasters comes to market having raised £15m (before expenses) of new money to grow the business, although it should be noted that £170m was raised for selling shareholders including Reliance Big Entertainment and executive directors and senior management.
CRACKING THE GROWTH CODE
One of the most recognised British game developers and publishers with a 30 year track record of producing hit titles, Codemasters specialises in high quality racing games.
It currently manages three established racing game franchises, namely ‘DiRT’, ‘GRID’ and ‘F1’ and a fourth franchise, ‘ONRUSH’, is on the starting grid ahead of a launch this month.
Founded by the Darling family back in 1986, Codemasters boasts a loyal fan club of gamers, a balanced racing games portfolio, a long term relationship with F1 and strong ties to leading car manufacturers and automotive brands.
Investors will be more interested to learn the company has been successfully turned around by the current management team, led by former Electronic Arts mover and shaker Sagnier, with sales and adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) having increased year-on-year since 2015.
For the year to March 2018, the top line grew 27% to £63.6m and adjusted EBITDA shot up almost 90% to over £11.7m.
Sagnier insists that ‘joining AIM will enable the company to consolidate our leadership and expand our reach in the racing category. It will allow us to attract and retain employees, further engage consumers with high quality games and services, and consider potential strategic acquisitions.
‘I would like to thank our talented and passionate employees for their dedication and Reliance Big Entertainment for their continued support. We welcome our new shareholders and look forward to many years of continued growth.’
AN INDUSTRY IN VOGUE
Codemasters’ placing attracted strong support from high quality institutional investors and was oversubscribed as a result. Investors have a healthy appetite for players in the vast video games industry, one of few bright spots in the wider consumer market at present.
Shares in Sheffield-based gaming co-developer Sumo (SUMO:AIM) have been grappling their way higher, Cambridge-based Frontier Developments’ (FDEV:AIM) eagerly-awaited Jurassic World Evolution game launches on 12 June, the first day of E3 Expo, the biggest games industry event of the year, while games industry technical services provider Keywords Studios (KWS:AIM) is keeping to the acquisitions trail.
Codemasters’ increased financial clout and profile will help it recruit new talent, fund further development of its own technology, extend the reach of its existing franchises onto more platforms such as Switch, mobile and VR (virtual reality) and beef up its marketing to reach a wider audience of gamers.
Shares hopes to meet with senior management soon in order to delve more deeply into Codemasters’ competitive strengths and strategy for growth.
