Razer could be valued at up to $6.1b in consortium's plan to take it private

HONG KONG • A consortium led by top executives of Razer plans to value the Hong Kong-listed gaming hardware company at up to HK$35 billion (S$6.1 billion) in a deal to take it private, said two people with direct knowledge of the matter.

Razer chief executive Tan Min-Liang and non-executive director Lim Kaling, with a combined stake of nearly 60 per cent in the firm, lead the group that is offering up to HK$4 a share, the sources said, or almost double the average price of HK$2.1 over the past month.

The move comes as the consortium believes Razer, based in the United States and Singapore, has been undervalued in Hong Kong, where investors typically pay more attention to tech firms from mainland China, the sources added.

They declined to be identified due to confidentiality constraints.

In a regulatory filing yesterday, Razer cited its board as saying there is no certainty that the discussions among Mr Tan, Mr Lim and the financial investors will ultimately lead to the terms of a potential transaction being agreed upon.

It said the potential offer price has not been determined and no decision had been made by Mr Tan and Mr Lim on whether to proceed with any potential transaction.

Razer as well as Mr Tan and Mr Lim declined to comment.

Shares of Razer ended 11.5 per cent higher yesterday, after paring a rise of 23 per cent in afternoon trade following the Reuters report.

A deal would further feed a surge in strategic investors and buyout firms tapping Hong Kong companies for take-private opportunities, lured by undervalued shares.

Hong Kong-listed firms have been involved in US$8.15 billion (S$11 billion) worth of take-private deals this year, versus US$23 billion for all of last year, Refinitiv data showed.

Late last month, Razer said in a filing that Mr Tan and Mr Lim were in preliminary talks with financial investors to explore the possibility of a transaction.

The consortium is also in talks with private equity firm CVC Capital Partners for the buyout, said one of the sources, as well as two others with knowledge of the matter.

Buyout firm KKR has also studied the deal but has yet to decide whether to invest, said the first two sources and another person.

CVC Capital Partners and KKR declined to comment.

The talks have advanced and the consortium aims to announce the deal by the end of the year, the first two sources said.

It aims to eventually list Razer in New York to exploit higher valuations for tech stocks, they added.

Founded in the US and Singapore in 2005, Razer has expanded from wireless mice to make gaming laptops and keyboards, as well as other accessories.

It swung to a record net profit of US$31.3 million in the first half of this year, riding a gaming boom as Covid-19 lockdowns kept people at home, versus a net loss of US$17.7 million a year earlier. The US accounted for 42 per cent of the first-half revenue.

REUTERS