January 18, 2017 / 9:35 AM / in 7 months

South Korea's Netmarble seeks M&As, U.S. expansion: founder

The founder and chairman of the board of Netmarble Games, Bang Jun-hyuk, speaks during a news conference in Seoul, South Korea, January 18, 2017.Kim Hong-Ji

SEOUL (Reuters) - South Korea's largest mobile game company, Netmarble Games Corp, is seeking more mergers and acquisitions and intellectual property rights to expand its share of the gaming market in North America and Europe, its founder said.

The Tencent-backed (0700.HK) firm - with plans for a public listing estimated at billions of dollars in the first half this year - aims to raise its ranking in key markets to reach its goal of becoming a global top 5 game company by 2020, Bang Jun-hyuk told Reuters.

Netmarble wants to place within the top 10 in mobile games in China and Japan, Bang said on the sidelines of a news conference on Wednesday.

"The global game market's wave of M&As that began in 2016 is expected to continue to the first half of 2018," the 48-year-old controlling shareholder said. "After the market is reorganized, the remaining major companies' profits are expected to rise."

Netmarble, which CLSA valued at 14.3 trillion won ($12.3 billion) in a Jan. 17 report, will look to the initial public offering to build up funds for mergers and acquisitions and other investments, to help reach its target of 5 trillion won in sales by 2020.

It reported 1.5 trillion won in 2016 provisional sales, up from 1.07 trillion won in 2015, helped by its blockbuster role-playing game "Lineage 2: Revolution" which earned 206 billion won in first-month revenue since launching in one country, South Korea, in December.

The 2016 hit Pokemon Go reported about $200 million in first-month revenue, according to data provider Sensor Tower.

South Korea is the world's fourth-largest games market behind China, the United States and Japan with annual revenue of around $4 billion, according to June 2016 data from research firm Newzoo.

Bang said the company plans to make role-playing games, in which participants assume the role of a character and interact within the game's imaginary world, more mainstream in North American and European markets where strategy games dominate.

Netmarble has invested in mobile game studios in the United States and Canada. However, the need for a bigger war chest was evident when it lost out last year to a Chinese consortium including Alibaba's Jack Ma that offered $4.4 billion in cash to buy Caesars' online game unit.

Aside from plans to take "Lineage 2: Revolution" global, Netmarble announced on Wednesday plans for 17 new games, with some based on franchises such as Transformers and G.I. Joe.

Bang said there would also be 4 games developed for China. "Going forward, we have a target of releasing major games in China and Japan," he said.

Bang, a high school dropout who founded Netmarble in 2000 after two previous start-up failures, sold management control to South Korean conglomerate CJ Group in 2004 but returned to lead a struggling Netmarble in 2011.

He owns a 32.4 percent stake in the firm, while Tencent Holdings Ltd holds a 25.3 percent stake through an investment vehicle.

Netmarble received Korean exchange approval for an IPO in December 2016. JP Morgan (JPM.N) and NH Investment & Securities (005940.KS) are advisers.

Editing by Jacqueline Wong

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