Investor poised for Candy Crush gain

Apax Partners stands to score a 10,000% gain on its 2005 investment in King Digital Entertainment as the maker of smartphone game Candy Crush Saga prepares its initial public offering.

London-based buyout firm Apax, in one of its last venture capital deals, injected about $35m (€25m) into King, according to a source. The games maker set terms last week for the IPO that would value it at as much as $7.6bn. Apax’s stake could be worth $3.5bn.

While Dublin-based King has developed over 180 games in the past decade, Candy Crush, a puzzle that features coloured candies, fuelled most of its growth.

The potential windfall comes as venture capitalists are seeing their best returns since the late 1990s dot-com bubble.

Twelve venture-backed companies went public in the US last year with market capitalisations above $1bn at the time of offering.

“Apax had the insight early enough to make the right investment. King has been a superstar in mobile,” said Michael Hickey, an analyst with Benchmark. “When you have a blockbuster game like Candy Crush, you’re going to realise a pretty significant performance.”

Index Ventures, a Geneva- based venture-capital shop that invested $6m alongside Apax in 2005, also would reap about a 10,000% paper profit. &

Founded in the late 1970s by Alan Patricof and Ronald Cohen, Apax made venture capital investments and then in 1993 moved into leveraged buyouts.

Martin Halusa, who succeded Cohen as CEO, decided to stop investing in startup companies in 2007 and focus solely on buyouts after raising a record €11.2bn fund.

Propelled by an 11-fold rise in King’s revenue last year to $1.9bn, King announced the IPO in February. It plans to raise as much as $533m by selling 22.2m shares for $21 to $24 apiece and would trade on the New York Stock Exchange under the symbol KING.

Apax’s stake would be valued at about $3.5bn at the top of the proposed price range and $3.2bn at the middle.