RAZER'S share performance on its first trading day on Monday got a boost from investor confidence in Asian tech IPOs (initial public offerings) as well as the firm's diversification from gaming into smartphones and e-payments.
Razer's stock price surged by as much as 41 per cent to HK$5.49 (S$0.96) during its debut on the Hong Kong Stock Exchange. The Singaporean-founded, San Francisco-based firm had priced its IPO at HK$3.88 (near the top of the range) and raised HK$3.9 billion in net proceeds.
Razer opened trading at HK$5.12 apiece, nearly 32 per cent higher than its offer price. More than 893 million shares exchanged hands, trading at between HK$4.56 and HK$5.49 per share. The counter finished the day at HK$4.58, 18 per cent higher than its offer price. Razer's market cap was HK$41.8 billion as at Monday.
Ke Yan, an analyst at Singapore-based research company Smart-karma, said that a reason behind Razer's share price jump is "favourable sentiment towards IPO these days", given the many recent "successful" tech IPOs in the region, such of those of FIT Hon Teng, a Foxconn cable and connector division, and ZhongAn Online P&C Insurance, one of China's largest online insurers.
He told The Business Times: "That and valuation aside, Razer has a lineup of heavyweight investors such as GIC and Li Ka-Shing. Apparently, Hong Kong investors buy the Li Ka-Shing story." Mr Li, Hong Kong's richest man, is one of Razer's early backers - while GIC, Singapore's sovereign wealth fund, is a cornerstone investor in Razer's IPO.
Mr Ke added: "During book building, many of the investors, especially private banking clients and some boutique funds, did not get allocation. This created some sense of scarcity for Razer."
Founded in 1999 as a gaming hardware company that makes computer mice, keyboards and controllers, Razer has over the years diversified into smartphones (it launched a US$699.99 Android device for gameplay just this month), e-payments (it submitted a proposal for a unified e-payments system for Singapore in September), and corporate venture capital (it unveiled zVentures, a US$30-million investment fund for startups, in 2016).
Kenneth Liew, senior research manager at IDC's Asia-Pacific client devices group, said that while Razer has been "experimenting in new areas", its strength remains in gaming, in which it is likely to continue to do well on the back of their branding.
Mr Liew told BT: "Razer's IPO debut shows confidence from investors that the gaming market is growing. The personal computer gaming market is showing good growth over the past few years, and hardware vendors are riding on this trend to push out more products for the gamers."
He added that the introduction of eSports as a medal event in the 2022 Asian games will continue to boost interest in gaming. "The eSports tournaments are getting more publicity."
Smartkarma's Mr Ke said that Razer's valuation shows it is more than a pure gaming hardware company: its market capitalisation of HK$41.8 billion is only 16 per cent less than laptop player Lenovo (whose market cap is HK$50 billion) and 20 per cent less than hardware player Asus (HK$52.4 billion).
He said: "As the company's valuation builds in high expectations in future performance, share price performance post listing is all about execution and delivery. But both smartphone and e-payments segments will take years to grow, so it is important that the company keeps its goals and progress transparent to investors."
Razer co-founder and chief executive Tan Min-Liang, a Singaporean and formerly a lawyer, owns about 42 per cent of the company with his family. He is set to become a billionaire following the IPO.