IPO FILING: Changyou.com, Chinese MMORPG (CYOU)

It has been a while since we had an IPO filing and the IPO market has been a ghost town with only a handful of deals since last summer.  Changyou.com, a Chinese MMORPG video game operator, apparently has ambitions of an Initial public offering in the U.S.    The company developed the game Tian Long Ba Bu, or TLBB, which was launched in May 2007.

It currently operates two MMORPGs, TLBB, and Blade Online, or BO, which it licensed from a third party. For the three months ended December 31, 2008, Changyou.com had approximately 1.8 million active paying accounts, which game points are utilized for the purchase of virtual items at least once during a given period, for TLBB and approximately 159,000 active paying accounts for BO.

Changyou.com’s revenues grew from $42.1 million for the year ended December 31, 2007 to $201.8 million for the year ended December 31, 2008.  Its net income grew from $5.3 million to $108.0 million during the same period. For the year ended December 31, 2008, 93.6% of total revenue was attributable to TLBB.

This filing is for 7.5 million ADRs which will represent 15 million Class A ordinary shares in China.  It says  3.75 million of the shares are being sold by the company and 3.75 million are being sold by existing shareholders.

Sohu.com Inc. (NASDAQ: SOHU) currently owns the company, so this is technically a partial spin-off from Sohu.com.

The company has listed a price range of $14 to $16 per share and has applied to take the designated ticker of “CYOU” on NASDAQ.  Credit Suisse and Merrill Lynch are listed as lead underwriters, while Citi and Susquehanna Financial are also listed in the offering.

JON C. OGG