Game on track for £360m float as book covered

Oliver Smith
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HIGH street video game retailer Game will push the button on an initial public offering in the coming days with its book covered by predominantly long only institutions.

Shares are expected to be priced between 200p and 212p giving the firm an initial market valuation somewhere between £340m and £360m post the £20m that will be raised.

The chain is currently 99 per cent owned by US activist hedge fund Elliott Advisors and one per cent owned by Henry Jackson’s Opcapita, who fronted the buy-out of Game in March 2012.

The float will also trigger a windfall payout for Elliott as it sells down its stake, leaving the group with a free float of at least 35 per cent.

The return will mark a radical turnaround for the group, which fell into administration after costs from its vast UK store portfolio together with an ambitious overseas expansion programme left the firm unable to pay its £21m rent bill.

Chief executive Martyn Gibbs said the group had been “transformed” into a stronger multi-channel business since its restructuring and has slimmed down costs by halving its store portfolio to 560 stores across the UK and Spain.

The retailer, which has been renamed Game Digital, reported £586.4m of revenues in the six months to 25 January compared with £427.3m the same time last year, while adjusted earnings doubled from £24.5m to £50.8m. Adjusted earnings in 2013 were £47m.

As part of the offering, Game said it will also issue “virtual loyalty shares” worth £2m to loyal customers who shop frequently with the retailer.

Some 20,000 customers will be able to trade in their shares at fixed times in the year for reward points, which can then be redeemed in stores. Game said the scheme will be largely funded by its main shareholder Elliott.