Zynga Inc., the top developer of games for Facebook Inc.’s site, will file paperwork for an initial public offering today, said GreenCrest Capital Management LLC, which cited a “major investor” in the startup.
The company has chosen Morgan Stanley to be the lead underwriter of an offering that will raise more than $1 billion, said Nitsan Hargil, an analyst at GreenCrest, which focuses on closely held firms. He didn’t name the investor, saying only that it was an early backer of Zynga.
Zynga, known for “FarmVille” and “Texas HoldEm Poker,” is joining the biggest wave of Internet IPOs since the dot-com heyday in 2000. LinkedIn Corp., Pandora Media Inc. and Yandex NV all went public in the past two months, and other Internet companies such as Groupon Inc. aim to benefit from the rebound with their own IPOs.
“Of all the companies we’re looking at, it’s the one we’re most excited about because it’s a real company with real revenues,” Hargil said yesterday in an interview.
Dani Dudeck, a spokeswoman for San Francisco-based Zynga, declined to comment, as did Pen Pendleton, a spokesman for New York-based Morgan Stanley.
Zynga’s sales will reach about $1.5 billion this year, generating $500 million of net income, Hargil estimates. The company doesn’t need the money it will raise from selling shares, the New York-based analyst said.
The startup is valued at $15.4 billion on SharesPost Inc., an exchange that connects buyers and sellers of privately held companies. That would make it the most valuable U.S. game company, ahead of Activision Blizzard Inc. (ATVI) and Electronic Arts Inc. (ERTS) Zynga recently hired former Electronic Arts Chief Operating Officer John Schappert for a senior role.
The company is backed by venture firms Foundry Group, Union Square Ventures, Kleiner Perkins Caufield & Byers, Institutional Venture Partners and Andreessen Horowitz. Russia’s Digital Sky Technologies and Google Inc. (GOOG) are also stakeholders.
“It simply is a way to give the company access to cheap capital and give the investors and employees who’ve invested time and money into the company an ability to monetize that,” he said.