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Codemasters is wildly optimistic if it believes an IPO is possible in 2009
You may be forgiven for having missed this interview with Rod Cousens of Codemasters in the Financial Times on Boxing Day last year.
Rod says that the company, majority-owned by private equity firm Balderton Capital, is in a position to float but the markets weren’t receptive; if they rebound in 2009 or early 2010, Codemasters will be ready.
I think that Rod is being wildly optimistic:
- Venture-backed IPOs are at an all time low – only six venture-backed businesses floated in the US in 2008, the lowest since the Seventies
- Eidos, the leading comparable for Codemasters in the UK, endlessly disappoints (see Eidos issues profit warning, risks breaching bank covenants), meaning UK investors are deeply sceptical of the industry
- Although the company is better managed than it was under the Darlings and revenues are growing 40% year on year, it has yet to create any new franchises and is reliant still on racing games Colin McRae and Race Driver
- While the company has had success in the online space, this is a licensee of third-party MMOs such as Dungeons & Dragons Online and The Lord of the Rings Online.
All of this points towards a games company that is better managed than in the past but is currently more of a services company, exploiting other people’s intellectual property, rather than a creative powerhouse.
The revival of Operation Flashpoint may be a step in the right direction, but irrespective of that, the markets seem likely to be closed to Codemasters for a couple of years at least.