Kane Wu and Julie Zhu

HONG KONG, (Reuters) – A consortium headed by Razer Inc’s top executives plans to price the Hong Kong-listed gaming equipment maker at up to HK$35Billion ($4.5B) as part of a deal to privatize it. Two people who are familiar with the matter stated that this was a plan.

The group, which includes Chairman Min-Liang Tan, and Kaling Lim (non-executive director), has a stake in Razer of almost 60%. They are offering HK$4 per shares for this deal, according to people. It is more than twice the monthly average share price at Razer of HK$2.1.

This is because Razer, which has its headquarters in Singapore and the United States, was undervalued by investors in Hong Kong. Investors tend to focus more on tech companies from mainland China.

Razer did not comment. Tan and Lim declined to respond to a Reuters question sent via company.

Razer shares rose as high as 23% Tuesday afternoon after the Reuters Report. At 0521 GMT, it was higher than 10%

Late October saw a filing from the company stating that Tan and Lim were having preliminary talks with financial analysts to discuss the possibility for a transaction which might or not lead to an offer general for the shares.

According to one person familiar with the situation, the consortium has also been in discussions with CVC Capital Partners, a private equity firm.

KKR, a buyout company, has already studied the deal and has not yet decided whether to invest.

KKR has declined to comment. CVC has not yet responded to the request for comment.

After talks progressed, the consortium hopes to announce the deal before the 2021 end according to the two first people.

According to Reuters’ first two sources, Razer is a consortium that aims to list Razer in New York. This will allow it to profit from the higher valuations of tech stocks.

RAZER PERFORMANCE

Razer was founded in America and Singapore in 2005. Since then, Razer has expanded from manufacturing wireless mice to gaming laptops and keyboards.

The company made a record $31.3 million net profit in 2021’s first half, thanks to the gaming boom and COVID-19 lockdowns that kept people home. This compares to $17.7million a year ago. Only 42% of the company’s first-half revenue came from the United States.

Razer became public in 2017 at HK$3.88 a share. It was a remarkable debut, fueled by strong retail demand and high levels of interest in new technology stocks.

Its stock fell by 24% from February’s peak price of HK$3.36, and its benchmark was at HK$3.36.

The shares rose 30% to 5-month highs after Tan and Lim filed their October report on investor talks.

Transactions would increase the number of strategic investors and take-private firms in Hong Kong, attracted to undervalued shares.

According to Refinitiv data, take-private transactions worth $8.15 Billion were made by Hong Kong-listed companies in 2021. This compares with $23 Billion for the entire last year.

($1 = 7.7923 Hong Kong dollars)