Sweden-based Fractal Gaming Group AB, better known in PC DIY circles by the moniker Fractal Design, is planning to raise cash via a US Nasdaq IPO. Specifically, it intends to list shares in an IPO on the Nasdaq First North Premier Growth Market. Shares will come largely from existing shareholder Litorina IV, which appears to want to release its principal shareholder investment for other projects. Ahead of this IPO there was talk of Fractal looking to be bought out in its entirety, so it looks like it is now executing plan B.
Commonly an IPO would be good for a company's prospects by providing a platform where it can raise cash to further invest in R&D, market development, manufacturing facilities and so on. With the purpose of this IPO to seemingly to release Litorina IV's capital (it has held since 2016), there may be less of that good stuff for the company. However, a reluctant principal shareholder isn't a great asset either, so the change should be good.
Fractal appears to be growing and its operations are on the front foot. Its stated four key strengths and competitive advantages are as follows:
- Operates in the attractive and rapidly growing global gaming market
- Premium brand with distinctive characteristics and leading position within relevant communities
- Founder-led management team with strong track record
- Impressive financial profile with a history of high growth and strong profitability
In terms of finances, things appear to be solid. In 2020 Fractal's net sales were SEK 636m (US$76m / GB£55m) and its earnings before tax and depreciation were SEK 139m (US$17m / GB£12m) which is better than 20 per cent. Fractal's net sales CAGR was nearly 40 per cent from 2018 to 2020.
Going forward Fractal says it intends to achieve organic net sales growth of >10 per cent from 2022 onwards, to maintain an EBITDA of 20 per cent, and to pay dividends to shareholders of between 30 and 50 per cent of its profits.
Fractal has offices in Sweden, USA, Taiwan and China and employed an average of 69 people full time in 2020. HEXUS reviewed several Fractal Design chassis and cooling products in 2020.
