Havok set for expansion: ThePost.ie


TCH Archives > Sunday Business Post > 2004/08/22 > Havok set for expansion

Havok set for expansion
Sunday, August 22, 2004

By Gavin Daly
Havok, the Dublin games software firm, will ``aggressively invest'' in new products, offices and acquisitions after a multimillion-euro investment by existing shareholders, according to chief executive David O'Meara.O'Meara would not comment on the size of the investment, but sources said it was around €4 million. The funding, jointly led by Trinity Venture Capital and Bank of Scotland (Ireland) in Dublin, brings Havok's total backing to more than €17 million.

O'Meara said the funding round had been fully taken up by the company's existing investors, with many of its small investors also participating.

He said the investment would allow Havok to accelerate its growth without using the cash on its balance sheet.

``This is not funding for day-to-day operations. Our balance sheet is strong and we are trading cash-flow positive.

"This allows us to do acquisitions, should we identify companies that we want to acquire.

"We will also accelerate our plans in Asia.''

Havok was founded in 1998 and has developed a physics engine that is used to make computer games more realistic. The software has been used in more than 100 games for the Microsoft Xbox, the Sony PlayStation 2 and the Nintendo GameCube, as well as in major films.

The investment came after ``very significant growth'' at Havok in the last 18 months, according to O'Meara. He said last month was the company's best month's trading to date.

``We are ahead of plans. Our financial and market position has never been stronger.''

O'Meara said that more than 30 of the games announced at this year's Electronic Entertainment Expo games conference in May used Havok's product. The company has just signed a multiple licence deal with game developer Pandemic, which is using the software in games such as Full Spectrum Warrior and Mercenaries.

O'Meara said Havok had also won its first deal in Japan and planned to establish offices in Japan and Korea.

``We won business in Japan without having a presence there. Now we need to establish a position in Asia by the time the next generation of games consoles come out.

``We will put people in there and tailor the product for the Asian market.''

Havok already employs around 50 people in Dublin and San Francisco. O'Meara said the company did not need more money for ongoing operations, but could raise investment for ``exceptional items''.

It is understood to be actively looking at buying other companies or technologies, but O'Meara said it was not close to any specific purchases.

While there has been some consolidation in the games sector, O'Meara said Havok was not interested in being acquired.

Electronic Arts (EA), the biggest games publisher in the world and a major customer of Havok, last month bought British firm Criterion for $48 million (€38.9 million). EA is now planning other acquisitions to expand its European business.

``If people ever hint that they are interested in acquiring Havok, our answer is that we are doing too well and are not interested,'' O'Meara said.

``Even if someone approached us, I can't see that happening.''

He said it was important for Havok to remain independent because its products were used by a range of competing companies. If EA were to buy Havok, for example, its competitors could stop using Havok's software, cutting off the firm's revenue stream.

Instead, Havok plans to launch a series of new products, beginning with software aimed at the animation industry. That software will be more user-friendly than existing animation products which are used almost solely by engineers. O'Meara said the new products should augur well for Havok revenues in 2005 and 2006.

Havok software has also been used in films, including Troy and The Matrix Reloaded, to make fight and stunt scenes more realistic. The company has just licensed its software to The Moving Picture Company in Britain, which has worked on Tomb Raider and James Bond films.

O'Meara said Havok had no plans to develop a version of the software specifically for the film sector. ``We have not been proactive about winning movie business, but have been brought into doing movies by people who have heard about our software,'' O'Meara said.

``We understand the game space very well. The movie sector remains a small part of our business.''

O'Meara said Havok's focus was on becoming the industry standard for the games industry as the next generation of games consoles, such as Xbox 2 and PlayStation 3, became available.

The company last week hired Jeff Yates, the former engineering director at Autodesk company Discreet, as director of product management.

O'Meara said Yates, who will be based in the US, would oversee Havok's strategy for the next generation of consoles.

O'Meara was a founder of data network firm PostGem which was bought by Esat in 1999 for €146 million. Havok's founders, Hugh Reynolds and Steven Collins, are director of professional services and chief technical officer of the company respectively.

Tom Byrne, the former head of Davy corporate finance, is chairman of Havok. Iona Technologies co-founder Sean Baker, Trinity Venture Capital's Don Harrington and Joe Concannon of Bank of Scotland (Ireland) are also on the board of the company.