Video-game services firm Keywords Studios has launched a rapid-fire £100m (€113m) share placing to boost its financial firepower for acquisitions of smaller rivals weakened by the Covid-19 crisis.
Keywords - which has taken over 44 firms since listing in 2013 - said it has opened an “accelerated bookbuild” that allows investors to register bids for the new shares over the coming few days. It cited the Covid-19 crisis as feeding home-bound consumers’ appetite for video games - and opening up acquisition opportunities among struggling rivals.
“Acquisitions have been instrumental and continue to be a key pillar of the growth strategy of the group, increasing scale and capabilities across multiple geographies,” Keywords said in its London Stock Exchange announcement.
“Increased game playing due to Covid-19-related isolation measures is also driving continued demand for content,” it said. “The structural drivers of growth across the video games market remain, and have been accentuated by Covid-19, including the ongoing trend towards outsourcing with customers now more likely than ever to seek a more resilient provider of scale.”
Keywords said its own revenues were continuing to rise during the Covid-19 crisis – but many of its smaller rivals were “typically single location and service with fewer clients and less able to weather the disruption”. It cited an industry survey suggesting that nearly a third of these firms worldwide risked insolvency.
“This is likely to result in an increased number of acquisition opportunities for Keywords Studios, with some targets now more inclined to re-engage previously stale exploratory conversations,” it said.
The price of Keywords’ new shares will be set once the book closes within the coming week, with placement in London by Wednesday, May 20.
Keywords, based in Leopardstown, has operations in 59 cities and 21 countries. It helps most of the world’s video game developers with core elements of games development, from conceptual art to 3D rendering and foreign-language conversion.
The firm said most of its approximately 7,000 employees worldwide were working from home, while 800 staff mostly in China have returned to their usual workplaces.
Keywords is currently valued at around £1bn (€1.1bn). Ahead of its after-hours announcement, Keywords’ shares fell by 3.27pc to close yesterday at 1,540 pence (€17.42) in London.