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Bigpoint gets bought, but for half a billion dollars less than its most recent investment valuation, a fall of over 80% in 5 years
In April 2016, lots of sites reported that Germany’s Bigpoint, one of the pioneers of browser and F2P gaming, was bought by Chinese firm Youzu Interactive, for Eur80m ($89.7m). They bought into the PR spin that this is a sign of the globalisation of the $100 billion game industry and most parrot the line that “Bigpoint is poised to launch Hocus Puzzle, with a marketing budget in excess of €30m globally, or $33.6 million.”
What no-one is reporting is just how far the valuation of Bigpoint has fallen since the heady days of 2011.
In April 2011, Bigpoint shares worth $350 million changed hands, valuing the company at $600 million. Investors Peacock (the investment fund of GE/NBC Universal) and GMT sold some, but not all, of their stakes to TA Associates and Summit for $350 million. None of the money went to the company, but by my estimations, Peacock and GMT bought about 70% of the company for $80 million in 2008 and sold 60% of it for $350 million in 2011, a return of 5x over 3 years (they retained a stake of, by my estimations, 10%). Which is pretty good.
Meanwhile, TA and Summit bought an estimated 60% of Bigpoint in 2011 for $350 million at a valuation of $600 million and sold it all five years later for $90 million, a fall of over half a billion dollars and over 80% of the value. That’s a huge fall.
It’s amazing how few journalists noticed.
PS I wrote this article at the time of the deal, but somehow failed to hit Publish. I thought that the analysis was useful enough to put up for public record.