The real numbers behind Bigpoint’s $350 million deal

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Congratulations to Heiko Hubertz, Simon Guild and the rest of the team at Bigpoint. They’ve just sold a majority stake in Bigpoint for $350 million.

But if you play Bigpoint’s games, and are hoping for a new raft of gaming goodness for that money, hold the champagne.

Not a penny of that money is going to the company.

Who did what in the Bigpoint investment?

Back in 2008, Bigpoint did a similar investment round. Peacock (the investment fund of GE/NBC Universal) and GMT each acquired a 35% stake in Bigpoint for around $40 million each. That investment of approximately $80 million valued the company at $110 million. CEO Heiko Hubertz held the remaining 30% stake.

Fast forward to 2011. TA Associates and Summit Partners have acquired some, but not all, of the Peacock/GMT stake for $350 million.

What were the terms of the Bigpoint deal with TA Associates and Summit?

This is a little harder to work out.

The Financial Times reports that the $350 million investment values Bigpoint at more than $600 million.

It says that GMT and GE will retain a minority stake, Heiko will retain his 30% stake and TA/Summit will have a majority.

My guess is that the shareholding structure in Bigpoint looks a little like this:

• Heiko Hubert, CEO: 30%
• TA/Summit: 60%*
• GMT/GE: 10%**

* An investment of $350 million at a $600 million valuation implies at 58.3% stake. But since the FT refers to a valuation of “more than $600 million”, I’m guessing it’s a round number.

** In the intervening period, NBC Universal has merged with Comcast and combined its investment arm with the existing Comcast business. Comcast appears to be exiting Bigpoint as part of this transaction.

Was it a good return?

If I’m right in the numbers above, then the investors in 2008 bought 70% of Bigpoint for about $80 million (I think the figure was actually $77 million, but I’m not totally certain). Three years later, they sold 60% of Bigpoint for $350 million.

So their 60%, worth $66m in 2008, was worth $350 million in 2011. That’s a return of more than 5x. Somebody at Peacock should be very happy.

And how is Bigpoint doing?

Pretty well by the looks of things.  In one interview, Heiko states that Bigpoint had revenues of $200 million in 2010, more than double the previous the year. (From what I had previously understood, that looks nearer to triple the previous years revenue, not just double).

This may explain why the company felt no need to take new capital as part of the investment round: all of the money went from TA Associates and Summit to existing investors, not to the company.

Of course a capital raising is time intensive and very distracting for management. Even without new money, it will be good for the company to be able to stop trying to sell shares on behalf of its investors and to concentrate on building the company.

So we should all look forward to more big things from Bigpoint through the rest of the year.

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