Zeus Capital leads on GBP145m Sumo IPO and GBP78m combined fund raising
Independent investment bank Zeus Capital has acted as nominated adviser (NOMAD) and sole broker to Sumo Group, as the independent game developer announces its GBP145 million AIM IPO.
The transaction saw strong support from institutional investors, including two successful share placings undertaken by Manchester-based Zeus, raising a combined total of GBP78 million.
Sumo Group is one the UK’s largest providers of creative and development services to the video games and entertainment industries and has previously provided co-development solutions to global developers and publishers including Microsoft, Sony, Sega and IO Interactive. Founded in 2003, the business employs more than 450 across its headquarters in Sheffield, Nottingham and Pune, India.
In June this year, Sumo added to its offering with the acquisition of Atomhawk, an award-winning visual design company, servicing the games, film and visual effects industries. The group now delivers full-service visual and development solutions, which include initial concepts and pre-production, production and development and post-release support.
More recently, the firm expanded its offering to generate its own intellectual property, launching Snake Pass in March 2017 across all major consoles. This has proven hugely successful for Sumo, selling more than 170,000 units since release, and generating an 83 per cent return on investment.
Following the transaction, Sumo plans to use the funding to support its organic growth strategy. This includes further development of new franchise titles and adding downloadable content for existing titles, either on solo projects or in collaboration with other developers and publishers.
The deal sees the company’s owner, Perwyn LLP, retain a substantial shareholding of the company on admission. The private equity house has been the majority shareholder at the firm since September 2016, following a secondary buyout from NorthEdge Capital.
Carl Cavers, Founder of Sumo Digital and CEO of the Company, says: “We are delighted to announce our intention to float on AIM. This is a significant step forward in Sumo’s journey to become a global leader in premium development and creative services to the video game and wider entertainment industries. We have had an overwhelmingly positive response to the IPO, which has been very well supported by blue chip institutional investors.
“Our people are our business; we believe our teams are very well positioned to lead the way in one of the world’s most exciting creative industries. Being a quoted company in a fast-growing tech sector will, we believe, allow us to execute our strategy, whilst continuing to put quality and creativity at the forefront of the products and services we deliver.”
This is the latest in a strong year for Zeus Capital, which has completed five corporate IPOs as sole adviser in 2017, as well as a further GBP303m in secondary fundraisings. This includes the GBP190m IPO of Strix Group plc, the GBP190 million IPO of Xafinity plc and the GBP87 million IPO of Tatton plc, all of which have seen double digit share price rises since listing. Over the past five years, Zeus has raised more than GBP3.3 billion on 26 IPOs and reverse takeovers.
Richard Darlington, director of corporate finance at Zeus Capital, says: “Sumo Group has shown an ability to offer a full end to end service in a rapidly growing marketplace, investing heavily in its leading technology and creative solutions to produce high quality output for its blue chip customer base. As a result, the company is ideally placed to thrive on AIM, and is well positioned to benefit from the growth in demand.
“This has been another outstanding Northern deal for the Zeus Capital team, following similar recent successes on Tatton and Strix. As a result, the firm is ranked second by funds raised on AIM in 2017, building on our strong track record on the market in recent years. Our transactions this year have shown that there is significant opportunity for growth following a listing, and we look forward to working with Carl and the team to unlock this in the coming months.”
Grant Thornton and Addleshaw Goddard provided advisory services to Sumo Digital, while Zeus Capital was advised by Eversheds on the transaction.