Sulake eyes IPO in 2008

Mon Apr 23, 2007 1:45 PM BST By Tarmo Virki

HELSINKI, April 23 (Reuters) - Internet company Sulake plans to list next year on the back of strong investor demand for social networking sites, the Finnish firm said on Monday, after it said it bought social networking firm Dynamoid Oy. Sulake, which had 2006 sales of 38.5 million euros ($52.2 million), said it will be the largest Internet company in the Nordics after the deal. The company -- known for its successful Habbo Hotel teenager-networking Web site -- aims to list its shares next year, with the London Stock Exchange and Helsinki bourse the most likely options, its chairman Jussi Nurmio said.

"Internet, distribution, community -- thats what is interesting for the investors. Many investors are interested in this media," Nurmio told Reuters on sidelines of a news conference. Sulake's Chief Executive Timo Soininen said the company was working to make itself ready for the listing, targeting a 20 percent profit margin for earnings before interest, tax, depreciation and amortisation by the end of 2007. "Within the next 8 to 16 months is our aim (to list)," Soininen said.

Habbo Hotel (http://www.habbo.com/) has over 7 million monthly visitors, with an average age of under 16 years and spending an average one euro a year on the site.
Dynamoid runs Finland's most popular social networking site IRC Galleria which has more than 400,000 registered users, who spend on average around 20 hours a month on the site. Sulake's CEO said he was not worried about sales growth slowing to just 29 percent in 2006, after it at least doubled its revenues for several years.

"I think we have a good chance to continue growing at a super speed, over 50 percent a year," said CEO Soininen. "In the United States we have only scratched the surface, our advertisement sales are only at the beginning and also the acquisition gives a boost." Dynamoid has started up first networking sites in Russia and Germany and Sulake said more will follow shortly. Sulake has operations in around 20 countries.

Sulake said it hopes to take on competition from much bigger rivals such as MySpace. It said IRC Galleria users spend 10 times more time on the site than users of its many larger rivals. "The usage numbers are amazing. The countries are not that different, so it is clear that the model works also elsewhere," chairman Nurmio said.
Sulake's main owners are Finnish ad agency Taivas, which is partly owned by British giant WPP , venture firms 3i and Benchmark Capital, and telecoms operator Elisa .