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Shanda Games prices US initial public offer at top end of range

(China Daily/Agencies)
Updated: 2009-09-26 08:05

China has 338 million Internet users, and this is big business for online game providers like Shanda. [China Daily]

Shanda Games Ltd priced shares in its $1.04-billion initial public offering at the top end of a range as rising sales at China's biggest online games provider helps attract investors.

The Shanghai-based company and parent Shanda Interactive Entertainment Ltd sold 83.5 million American Depositary Receipts at $12.50 apiece, according to a sale document. The IPO was managed by Goldman Sachs Group Inc and JPMorgan Chase & Co.

Shanda Games increased first-half profit 75 percent as it attracted more players with games such as MIR 2 and Aion in the world's biggest online market. The company will speed up new product development and offer more titles from outside developers as competition from Chinese rivals including NetEase.com Inc and Changyou.com Ltd intensify.

"We are seeing more and more game developers in China starting out, and this will benefit publishers like Shanda," said Eric Wen, an analyst at Mainfirst Securities. Rivals such as NetEase and Changyou rely more on self-developed games, said Wen, who rates shares of parent Shanda Interactive "buy".

Related readings:  Shanda spins off video games unit in $800m IPO  Shanda to buy majority stake in Hurray Holding  Shanda planning 2b yuan acquisitions  Shanda licenses table tennis game from Actoz

First-half profit rose to 671.2 million yuan from 382.8 million yuan a year earlier, according to Shanda Games' IPO prospectus. Sales climbed 43 percent to 2.03 billion yuan.

Shanda Interactive, which derived 96 percent of its 2008 revenue from games, said it would focus on developing other Web businesses. In June, the company bought control of Hurray! Holding Co, a Chinese Internet-music provider.

The parent's other Web businesses include an online-literature unit that accounts for more than 80 percent of the market in China, Jin Yoon, an analyst at Nomura Holdings Inc, wrote in a May 26 report.

China added 40 million Web users in the first half for a total of 338 million, according to the China Internet Network Information Center.

Shanda Interactive retains 71 percent of Shanda Game's stock and 96 percent of voting control. The unit's shares will trade on the Nasdaq Stock Market under the ticker "GAME."

Shanda Interactive declined $1.67 to $56.77 in New York trading on Thursday. The shares have advanced 75 percent this year, compared with the 108 percent gain at NetEase, China's second-biggest online games company.