AppLovin hires Morgan Stanley for IPO process

AppLovin, the mobile app and gaming company, hired Morgan Stanley for its IPO process. Sources say that the IPO may come out in early January of 2021.

AppLovin is a mobile app and gaming company located in Palo Alto, California. Adam Foroughi, John Krystynak, and Andrew Karam found the company to carve a specialized service sector. The company operated without making any news till 2014, but in 2016, the company got a huge offer. Chinese equity firm Orient Hontai capital offered to buy the company for $1.42 billion. Though it was a massive offer for a 4-year old startup, the sale did not proceed.

IPO or Initial Public Offering is a process by which privately-held companies open up their shares for the public for the first time. Public investors can buy shares from the company by paying the price set.

AppLovin’s IPO plans

The company has decided to take itself for Initial Public Offering (IPO), talking for years. Reports indicate that the company has hired Morgan Stanley to carry on the process. Morgan Stanley is an America-based multinational investment and financial services corporation. AppLovin has hired Morgan Stanley to assist it in the process.

KKR and Co. is a private equity firm backing AppLovin, and it acquired a stock of AppLovin for $400 million in 2018. In 2018, AppLovin’s value was $2 billion. But, due to present market developments, the company is expecting a much higher valuation.

The company is expecting an annual revenue of $1.5 billion in 2020. The move of AppLovin to move for IPO is seen as a bold leap by market analysts, and one of the reasons is the boom of the gaming industry in the pandemic. The gaming industry saw a massive 30% growth compared to last quarter.

Ted Oberwager, managing director in KKR’s technology, stated that “Today gaming is a fractured, fragmented market. I think the market will consolidate, and I think AppLovin will be one of those consolidators.” He is also an AppLovin board member. He declined to comment on the IPO plans.

IPOs in Gaming

The gaming industry is now in the middle of valuations and acquisitions. Gaming platform Unity Software Inc went public last month at a valuation of $13.7 billion. The company reported revenue for the first six months of 2020 as $351 million. Its shares have risen more than 60% since the IPO. Recently, Microsoft acquired Zenimax media for $7.5 billion in cash. Zenimax media is the parent studio of Bethesda Softworks.

AppLovin hired Herald Chen as its chief financial officer. Previously, he was the head of technology at KKR’s technology, media, and telecom in the Americas.

AppLovin will certainly get profits from the IPO. It’s just a question of when.

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