Razer Inc. Announces Proposed Listing on Hong Kong Stock Exchange

Global Offering of 1,063,600,000 Primary Shares at Between HK$2.93 and HK$4.00 per Share to Raise Gross Proceeds of Approximately HK$3,691 Million (based on the mid-point of the Indicative Offer Price Range)

HONG KONG–(BUSINESS WIRE)–Razer Inc. (“Razer” or the “Company”, HKEX stock code: 1337), the leading global lifestyle brand for gamers, today announces the details of its global offering of shares (the “Global Offering”) and proposed listing on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

A total of 1,063,600,000 primary shares (subject to the Over-allotment Option) (the “Offer Shares”) are being offered under the Global Offering, comprising an international offering of 957,240,000 Offer Shares (subject to reallocation and the Over-allotment Option) (the “International Offering”) and a Hong Kong Public Offering of 106,360,000 Offer Shares (subject to reallocation) (the “Hong Kong Public Offering”), representing approximately 90.0% and 10.0% of the total number of the Offer Shares, respectively.

The offer price (the “Offer Price”) is currently expected to be between HK$2.93 and HK$4.00 per Offer Share.

Credit Suisse (Hong Kong) Limited and UBS Securities Hong Kong Limited are the Joint Sponsors. Credit Suisse (Hong Kong) Limited and UBS AG Hong Kong Branch are Joint Global Coordinators and Joint Bookrunners of the Global Offering. Credit Suisse (Hong Kong) Limited, UBS AG Hong Kong Branch, China International Capital Corporation Hong Kong Securities Limited, CMB International Capital Limited , ICBC International Capital Limited and UOB Kay Hian (Hong Kong) Limited are the Joint Bookrunners. Evercore Asia Limited acts as the Company’s financial advisor in relation to the Global Offering.

The international underwriters will be granted an over-allotment option (the “Over-allotment Option”), exercisable by the Joint Global Coordinators on behalf of the International Underwriters, whereby Joint Global Coordinators will require the Company to issue up to an aggregate of 159,540,000 additional Shares, representing not more than 15% of the total number of Offer Shares initially available under the Global Offering, at the Offer Price under the International Offering to, among other things, cover over-allocations in the International Offering.

Intended Use of Proceeds

Assuming an Offer Price of HK$3.47, the mid-point of the Offer Price range, and assuming the over-allotment option is not exercised, the net proceeds from the Global Offering are estimated to be approximately HK$3,507 million after deducting underwriting fees and commissions and estimated expenses relating to the Global Offering.

The Company intends to use the net proceeds for the following purposes:

  • Approximately 25% of net proceeds will be used to develop new verticals in the gaming and digital entertainment industry, including mobile devices;
  • Approximately 25% of net proceeds will be used to finance acquisitions that will continue the expansion of the Company’s ecosystem;
  • Approximately 20% of net proceeds will be used to further expand Razer’s research and development capabilities;
  • Approximately 20% of net proceeds will be used to implement the Company’s sales and marketing initiatives to broaden the appeal of the Razer brand and increase user awareness of its new products, including zGold, the virtual credits service and other products; and
  • Approximately 10% of net proceeds will be used for general working capital purposes.

Overview of Razer

The Brand 

Founded by gamers, Razer’s passion for, and focus on creating premium gaming products that cater to the demanding requirements of gamers, have propelled the Company to become a lifestyle brand for gamers. Over the past twelve years, the Company has built an authentic brand in the gaming industry in line with its motto “For Gamers. By Gamers.” with innovative product designs crafted specifically for gamers.

As an early mover in professional competitive games, also known as esports, Razer is strategically positioned to capitalize on the opportunities in this segment which has grown rapidly in the past few years and has emerged as a standalone industry. The Company is a leading brand in esports and has sponsored top esports athletes for over twelve years. As of August 31, 2017, Team Razer, the Company’s esports brand, comprised 140 top esports athletes from 24 different countries, won more than US$13.6 million in prize money, and achieved 71 podium places.

Razer also utilizes its extensive online social media reach to attract and engage gamers. It has one of the largest online social media followings globally among games and esports brands. As of June 30, 2017, the Company had approximately 7.8 million “Likes” on Facebook, 2.9 million followers on Twitter, 1.8 million followers on Instagram, 1.2 million subscribers on YouTube, 251,000 followers on WeChat and 158,000 followers on Weibo.

The Razer Ecosystem

Razer has one of the largest integrated gaming ecosystems in the world. The Razer ecosystem consists of hardware, software and services designed and developed to integrate seamlessly and enhance personalized user experiences for gamers across different entertainment genres.

Hardware

Since its founding, Razer has been able to continually innovate, develop and sell category-defining hardware. Razer’s hardware, which includes premium gaming peripherals (including high-precision mice, fully customizable keyboards, audio devices, mouse mats and gaming console controllers) and systems (including laptops), deliver a competitive edge and immersive experiences for users. Razer has won the official “Best of CES” Award at the Consumer Electronics Show, the world’s largest consumer technology
show, for an unprecedented seven years in a row. To date, the Company has sold over 27.5 million connected devices, and it has sold over US$1 billion worth of hardware since January 1, 2014.

Software
At the core of the ecosystem is Razer Software Platform, which had over 35 million registered users as of June 30, 2017. It comprises Razer Synapse, an Internet of Things
(IoT) platform, which allows users to access a software platform via Razer hardware devices; Razer Chroma, a proprietary RGB lighting technology system; and Razer Cortex, an all-in-one game launcher, game optimizer, game aggregator and price comparison engine.

Services

The Company has just begun to monetize its Razer Software Platform by offering services to users. In March 2017, it launched the zGold virtual credits service, which allows gamers to purchase zGold and exchange it for digital content and items from various content providers. Razer entered into an arrangement with MOL Global, which has a wide distribution network for virtual credits in Southeast Asia, whereby their virtual credits, MOLPoints, will be rebranded as “zGold-MOLPoints.” Razer has also partnered with Three
Group, the mobile telecommunications division of CK Hutchison, to distribute zGold in Hong Kong and Europe.

Mobile Devices
Razer has also been exploring the mobile devices market for some time and believes there are substantial areas of innovation and opportunities for disruption of the existing mobile devices market category. The Company is currently in the final development stages of its first mobile device and is targeting to launch it in the fourth quarter of 2017, initially in the United States and Europe.

Global Footprint

The Company has a global footprint with nine offices worldwide and is recognized as the leading brand for gamers in the US, Europe and China. The Company has a geographically diverse revenue base, generating 50.1% and 48.8% of the revenue from the Americas, 27.0% and 28.2% from EMEA and 22.9% and 23.0% from Asia Pacific, including 12.7% and 11.4% in China, in 2016 and the six months ended June 30, 2017, respectively.
Razer’s software platform can be accessed worldwide and its sales and distribution network extends across six continents and 65 countries, as of June 30, 2017.

Global Games Market

Games are a pervasive element of popular culture and integral to the modern way of life of the world’s approximately 2.1 billion active gamers in 2016, the number of which is estimated to grow to approximately 2.7 billion in 2021, according to Newzoo. Based on Frost & Sullivan’s research, the global games market is the fastest growing segment within the global entertainment industry. In 2016, the global games market revenue of US$101.1 billion exceeded both the global cinema and global music markets, which according to Frost & Sullivan, generated US$39.9 billion and US$48.4 billion, respectively.

Min-Liang Tan, CEO and Co-Founder of Razer Inc., commented:

Our mission from day one has been – ‘For Gamers. By Gamers.’ Today, we are the world’s leading lifestyle brand for the 2.2 billion gamers worldwide and we continue to disrupt the gaming industry with the Razer ecosystem of hardware, software and services.

We have built a truly unique business and our Global Offering will allow us to raise capital to continue innovating, invest in cutting-edge R&D and focus on designing and engineering the competitive edge, the immersive experiences and access to digital content for gamers worldwide.

Most importantly, our public offering represents a milestone for us to take our motto to the next level. This will be a truly incredible opportunity for the Razer fans, gamers all over the world and those passionate about the gaming community to become owners and shareholders of Razer, and to join us on our mission – For Gamers. By Gamers.”

Public Offering Timeline

The Hong Kong Public Offering is expected to commence at 9:00 am on Wednesday, November 1, 2017, and is expected to close at 12:00 noon on Monday, November 6, 2017. Allotment results and the Offer Price are expected to be announced or made available on Friday, November 10, 2017. Dealings in the Shares on the Main Board of the Stock Exchange are expected to commence on Monday, November 13, 2017, under the stock code 1337.

White Application Forms and Prospectuses of the Company can be obtained from designated branches of the Receiving Banks, Bank of China (Hong Kong) Limited and the Bank of East Asia, Limited, and offices of the Joint Global Coordinators, Credit Suisse (Hong Kong) Limited and UBS AG Hong Kong Branch. The electronic version of the Prospectus can be accessed and downloaded from the websites of the Company at www.razerzone.com
and the Stock Exchange at www.hkexnews.hk. Applicants can submit applications using the White Application Form or online via the designated website of the White Form eIPO service
provider at www.eipo.com.hk. Applicants who would like the Hong Kong Public Offer Shares to be deposited directly into CCASS can also use the Yellow Application Forms or give electronic application instructions to Hong Kong Securities Clearing Company Limited via CCASS.

About Razer

Razer™ is the world’s leading lifestyle brand for gamers.

The triple-headed snake trademark of Razer is one of the most recognized logos in the global gaming and esports communities. With a fan base that spans every continent, the company has designed and built the world’s largest gamer-focused ecosystem of hardware, software and services.

Razer’s award-winning hardware ranges from high-performance gaming peripherals (for the PC and console platforms) to the Razer Blade gaming laptops. Razer’s software platform, with over 35M users, includes Razer Synapse (an Internet of Things platform), Razer Chroma (a proprietary RGB lighting technology system), and Razer Cortex (a game optimizer and launcher). Razer services include Razer zGold, one of the world’s largest virtual credit services for gamers, which allows gamers to purchase virtual goods and items from over 2,500 different games.

The company has a global footprint with 9 offices worldwide and is recognized as the leading brand for gamers in the US, Europe and China. Founded in 2005 and dual-headquartered in San Francisco and Singapore, Razer is backed by institutional investors such as IDG-Accel, Intel Capital and Horizons Ventures.

Razer Inc.
Offering Statistics At a Glance

Number of Offer Shares under the
Global Offering:

1,063,600,000 primary Shares

(subject to the Over- allotment Option)

Number of Hong Kong Public Offer
Shares

106,360,000 primary Shares

(subject to reallocation)

Number of International Offer
Shares:

957,240,000 primary Shares

(subject to reallocation and the Over-allotment Option)

Over-allotment Option: 159,540,000 additional primary Shares
Suggested Offer Price Range:

HK$2.93 – HK$4.00 per Offer Share

Based on an Offer
Price of HK$2.93

Based on an Offer
Price of HK$4.00

Market Capitalization1:

HK$25,969 million HK$35,452 million
Announcement of Allotment Results: November 10, 2017
Expected Listing Date: November 13, 2017
Stock Code: 1337
No. of Shares per Board Lot: 1,000

The following is a track record financial summary of Razer Inc. (US$
in thousands)

For the year ended December 31,

For the six months ended
June 30,

2014 2015 2016

2016
(unaudited)

2017
Revenue 315,247 319,706 392,099 152,681 198,004
Cost of sales (207,274) (219,505) (282,648) (112,040) (143,489)
Gross profit 107,973 100,201 109,451 40,641 54,515
Selling and marketing expenses (34,290) (41,110) (69,993) (25,465) (38,360)
Research and development expenses (23,640) (29,818) (52,175) (20,821) (36,167)
Profit/ (loss) for the year/period 20,332 (20,356) (59,616) (20,225) (52,644)
  • Attributable to Owners of the Company
20,332 (20,356) (59,332) (20,225) (51,895)

1 The calculation of the market capitalization is based on the assumption that 8,863,020,913 Shares will be in issue and outstanding immediately following the completion of the Capitalization Issue, the Global Offering and the issuance of Archview Holdback Shares (assuming the Over-allotment Option is not exercised and without taking
into account the Deferred Settlement Shares).

THE INFORMATION CONTAINED HEREIN IS NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION. THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION. ANY PUBLIC OFFERING OF SECURITIES TO BE MADE IN THE UNITED STATES WILL BE MADE BY MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM THE COMPANY AND THAT WILL CONTAIN DETAILED INFORMATION ABOUT THE COMPANY AND ITS MANAGEMENT AND FINANCIAL STATEMENTS. THE COMPANY HAS NOT REGISTERED, AND DOES NOT INTEND TO REGISTER, ANY OFFERING OR ANY PART THEREOF OR TO CONDUCT A PUBLIC OFFERING OF SECURITIES IN THE UNITED STATES. THIS WRITTEN MATERIAL IS NOT FOR PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES.