HONG KONG/NEW YORK - China's top video game operator, Shanda Games, priced its $1 billion U.S. IPO at the top of an indicative range, as firms globally make bold moves to capitalise on a spike in investor confidence.
Shanda Games' pricing rounds off the busiest U.S. IPO week in nearly two years. In the pipeline are IPO's from Spanish bank Santander's Brazilian unit and from insurance risk speciailst Verisk Analytics VRSK.O.
We view the third quarter of 2009 as a major inflection point in the IPO market, said Lisa Carnoy, global head of equity capital markets at Bank of America Merrill Lynch.
The combination of more deals, bigger deals and broader range of sectors speaks volumes about what we will see next quarter and into 2010.
Shanda Games priced its American Depositary Shares at $12.50 each, versus a previously announced range of $10.50 to $12.50, a banking source told IFR Asia, a sister publication of Reuters. Shanda Games declined comment on the pricing.
The list is the biggest U.S. offering by a Chinese Internet firm.
IPOs in the global pipeline are expected to raise $69.7 billion, according to Thomson Reuters data, buoyed by a surge of U.S. activity this summer, when 33 companies filed paperwork for prospective IPOs, versus four in the first half of the year.
With 28 offerings worth $8.2 billion, Asian IPO activity nearly tripled over the preceding quarter, after seven straight quarters of decline, according to Thomson Reuters data.
In the United States, 11 deals had priced in the third quarter through Wednesday, yielding $3.6 billion.
The quarter's IPO momentum looks set to carry into the last three months of the year. Banco Santander SA, the Brazilian unit of Santander, is planning an IPO worth as much as $8.6 billion that is set to list on the New York Stock Exchange and the Sao Paulo stock markets next month.
Some analysts said Shanda Games, which is being spun off from Shanda Interactive Entertainment (SNDA.O), may not fare as well as Changyou.com Ltd, which was also carved out from Chinese Internet portal Sohu.com Inc.
Do we have clear visibility this year of this company? Will the two games still grow at the same pace? ... I don't think so, said Credit Suisse analyst Wallace Cheung.
Shanda Games operates games such as Legend of Mir and South Korean blockbuster Aion in China. It competes with NetEase and Tencent Holdings in China's increasingly competitive gaming landscape.
Changyou.com, which raised $120 million in its April listing, is the top performing U.S.-listed IPO this year, with shares up 145 percent since their debut.
The IPO from Shanda Games is capitalising on China's red-hot online game market, the world's largest and fastest growing with more than 50 million gamers.
Industry revenue is expected to rise 30 to 50 percent this year to 24 billion yuan to 27 billion yuan ($3.5 billion to $3.9 billion), according to the Chinese government.
Goldman Sachs and JP Morgan are underwriting the IPO. (Writing by Melanie Lee; Editing by Anshuman Daga)