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Founders sell as Codemasters is driven towards a flotation

Codemasters, the computer games developer behind the Colin McRae rally series, is preparing for a Pounds 200 million-plus flotation in the next year, after its principal investor completed the buyout of the brothers who founded the firm.

Richard and David Darling sold their remaining interest of about 25 per cent to the existing investor Balderton Capital in a tidying-up exercise ahead of a listing. The sum was undisclosed, but is thought to run into tens of millions of pounds.

The founders will now step back from a company they have managed to keep going as an independent since 1986, but with a fortune from a series of stake sales to Balderton -previously Benchmark Capital -that is estimated at Pounds 95 million.

The brothers started as teenage developers, creating games for the Commodore 64.

They founded Codemasters -first game, the BMX Simulator -with the help of their father and developed games from their home.

Balderton has also brought in Goldman Sachs. The bank is paying about Pounds 50 million for a package of shares and convertible debt in return for an unspecified minority position. Balderton is aiming for a listing in either London or New York, where there are more comparable game publishers.

According to its last accounts, Codemasters earned only Pounds 1 million on sales of Pounds 52 million, but in the year to this month, sales are expected to be about Pounds 75 million and the goal is to take that figure to Pounds 150 million in 2007-2008.

The company is hoping to hit its target helped by Lord of The Rings Online -a new multi-player game set in J. R. R. Tolkein's Middle Earth -and the upswing in the cycle after the arrival of the Sony PlayStation3 and the unexpected success of the Nintendo Wii.

Codemasters, which employs 400 in Warwickshire, is one of the few remaining British firms in a sector dominated by the hardware makers Sony, Microsoft and Nintendo, and computer games publishers led by Electronic Arts.

Balderton is lining up banks to handle the listing, although the presence of Goldman Sachs as an investor gives it pole position in any flotation.