Zynga looking to raise $400 million in secondary stock offering

Zynga will seek to generate a further $400 million from a secondary stock offering in a bid to avoid a large drop off in share price.

That's according to the Financial Times, which claims people "familiar with the process" have stated the money will be diverted towards existing investors rather than the company itself.

It's believed Zynga is taking the action to prevent a share price 'pop' after its initial IPO in December, where an early surge is replaced by a sharp fall as enthusiasm cools.

Zynga itself has claimed the second offering will be made to "facilitate an orderly distribution of shares and to increase the company’s public float", though its timing – just before the ending of an agreement that prevents pre-public investors from selling their shares on – appears designed to keep the firm's share price high.

Commentators have also suggested Zynga is keen to set the wheels in motion before its operations on Facebook begin to decline, which research suggesting interest in the social network as a gaming platform is falling.

Currently, 96 percent of all Zynga's revenue comes from its operations on Facebook, though the company has recently unveiled its own browser-based gaming platform, sporting titles from third parties as well as its own library.

[source: Financial Times]