PE-backed Korean Social Casino Gaming Firm DoubleDown Targets $198m In US IPO

DoubleDown Interactive, a South Korean developer and publisher of mobile- and web-based casual casino games, targets to raise $198 million at the midpoint of its US initial public offering (IPO), according to its amended filing.

The filing comes as the global gaming industry continues to benefit from the COVID-19 pandemic as people quarantined at home turn to online games, according to gaming industry consulting firm Eilers & Krejcik Gaming

DoubleDown plans to float 11 million American depositary shares (ADSs) at a price range of $17 to $19. DoubleDown Interactive would command a market value of $896 million at the midpoint of the proposed range.

The target is nearly double its initial aim of raising $100 million when it first filed its listing documents early this month. It plans to list on the Nasdaq under the symbol DDI.

STIC Investments, a South Korean private equity manager, holds 32.3 per cent in DoubleDown through its STIC Special Situation Private Equity Fund. The PE firm plans to sell 14.6 per cent of its shareholding through the IPO.

DoubleDown said in its filing that the net proceeds from the IPO will be used for working capital and general corporate purposes.

“We believe that our funds and the proceeds from this offering will be sufficient to continue our business and operations as currently conducted through 2021; however, changing circumstances may cause us to consume capital significantly faster than we currently anticipate,” the company said.

DoubleDown Interactive is the creator of multi-format interactive casino games for casual players. Its flagship game – DoubleDown Casino – has been in the top 20 grossing mobile games annually on Apple App Store since 2015, according to App Anne. It also owns DoubleDown Fort Knox, which has already achieved three million cumulative installments since its launch in 2018.

The firm was an early pioneer in the social casino gaming segment and was among the initial publishers to launch a social casino game on Facebook.

In recent years, DoubleDown also embraced new distribution channels for its games. Its four games combined have been installed over 100 million times to date, the company added.

The company’s latest filing also showed that its revenue increased 11.4 per cent year-on-year to $76.1 million in the first three months of the year. After operating expenses of $58.7 million, up 12.9 per cent, and financial expenses, the business posted a net profit of $12.9 million for the quarter, up 46.6 per cent.

DoubleDown said the online gaming industry has been identified as an unintended beneficiary of the Covid-19 pandemic as people are quarantined in their homes.

“We are not an exception to this benefit. Our DAU (daily active users) and payers have increased since the stay-at-home orders began. We expect this benefit to continue throughout the period of varying quarantine restrictions,” the company said.

Gaming industry consulting firm Eilers & Krejcik Gaming estimated that the global market for mobile casual games was expected to be $22.1 billion in 2019, an increase of approximately 22 per cent from 2018. The growth rate of the social casino market is estimated at 5 per cent over the next four years and is projected to reach $6.8 billion by 2023.