Perfect World, a Beijing-based developer of 3D online computer games, expects to raise US$117 million from an initial public offering of American depositary shares, according to a regulatory filing. The offer, at US$13 per ADS, is priced in the middle of its indicative range of US$12 to US$14. The company will offer nine million ADS and a group of shareholders will sell 2.8 million ADS to raise a further US$36.4 million. Perfect World's arrival on the Nasdaq comes amid surging interest in online games among mainland players. Revenue from the mainland's online games sector increased 74 per cent last year to US$816 million, according to researcher IDC. Revenue could reach US$3 billion by 2011, representing annual growth of 30.2 per cent from 2006 to 2011, the centre said. Revenue from domestically developed online games reached US$500 million last year, accounting for 64.8 per cent of total online game revenue in the mainland, according to IDC tally. Perfect World launched its first three 3D multi-player online role-playing games - Perfect World, Legend of Martial Arts and Perfect World II - in 2006, and by the first quarter of this year the games had averaged about 237,000 concurrent users in the mainland. The company turned profitable in the first quarter of this year, reporting net income of US$5.1 million on sales of US$11.3 million after a full-year loss of US$3.6 million in 2006 on revenue of US$12.8 million. It also is tapping overseas markets, licensing its games to operators in 11 countries and seven regions, including Japan and Taiwan, and notching up overseas sales worth US$1.3 million for the first quarter. Even so, Perfect World trails rivals such as Nasdaq-listed NetEase, Shanda Entertainment and The9 by various measures. NetEase, the mainland's largest online game company with more than 677,000 average concurrent users, reported a net profit of US$39 million on sales of US$71.8 million in the first quarter. 'Perfect World's gross margin is about four percentage points below that of NetEase in the two most recent quarters, although both are in-house game developers,' said JP Morgan analyst Dick Wei. Perfect World's average revenue per user was about half that recorded by Shanda. This is despite the fact that both operators utlilise a play-for-free gaming model, said Mr Wei. Even though it made only about 30 per cent of The9's revenue, Mr Wei also noted, Perfect World spent the same on sales and marketing as its rival.