Balderton increases Codemasters stake amid float rumours(3)

Balderton Capital, the European venture firm that recently spun out of US group Benchmark Capital, has increased its stake in Codemasters, a UK-based video game develop, by buying out the company’s founders. The firm is simplifying the ownership structure ahead of a possible flotation.

Balderton Capital, the former European division of US venture firm Benchmark Capital, has completed its first deal since finalising its spin-out last week, by upping its stake in Codemasters, Europe’s largest independent video game developer.

Balderton, which already owned a 70 percent stake in Codemasters, has acquired the remaining 30 percent from the Darling family, the founders of the company, while Goldman Sachs is providing a financing facility of £50 million to support the company’s growth.

The move is intended to tidy up the company’s ownership structure ahead of a possible flotation in the next year, according to a market source.

Codemasters: makers of the classic Sensible Soccer game

The UK-based game developer has been competing against the giants of the industry since 1986. It now specialises in producing games based on sports or entertainment licences, with its biggest hits including The Lord of the Rings Online and Brian Lara Cricket. Older gamers may fondly remember some of the company’s earlier proprietary games, including classic titles like Micro Machines and Sensible Soccer.

Balderton – then known as Benchmark Europe – first bought a 40 percent stake in 2005, and increased this to 70 percent a year later.

During this time, Codemasters has taken some significant steps, signing a deal with Warner Bros for distribution of its games in the US and making two senior level appointments – Rod Cousens, formerly chief executive of US rival Acclaim, was brought in as chief executive, while former Sony Europe president Chris Deering was appointed non-executive chairman.

The company will now be wholly owned by Balderton, which has previously backed European success stories like Bebo and Betfair, and the company’s management, although Goldman’s financing package involves a debt instrument that will give it some options over the company’s equity. It will also leave the bank in pole position to pick up an advisory mandate if the company chooses to go ahead with a flotation.