What Saudi Wealth Fund Makes Second $1 Billion Bet on Swedish Gaming

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Saudi Wealth Fund Makes Second $1 Billion Bet on Swedish Gaming

ByAnton Wilen+Follow

June 8, 2022, 12:19 PM GMT+5:30

Updated onJune 8, 2022, 1:42 PM GMT+5:30

Saudi Arabia’s wealth fund has made its second $1 billion foray into the Swedish gaming industry this year as part of a drive to build stakes in video game makers and e-sports firms globally.

The Public Investment Fund’s Savvy Gaming Group will become the second largest owner in Embracer Group AB after acquiring almost 100 million shares in the Karlstad-based company. The move follows a similarly sized acquisition in January, when Savvy bought the e-sports division of Modern Times Group at an enterprise value of $1.05 billion.

The PIF, as the $500 billion fund is known, continues to deepen its push into a gaming sector that is in the grip of consolidation. Last month, the fund took a 5.01% stake in Nintendo Co., marking its third investment in a Japanese games company.

Read More: Saudi Wealth Fund Boosts Gaming Bets With Capcom, Nexon Stakes

The announcement of a rights issue directly to Savvy sent Embracer’s shares up nearly 10% during early trading in Stockholm on Wednesday. As a result of the deal, PIF will take an 8.1% stake in the Swedish company for 10.3 billion kronor ($1.05 billion). The price of 103.47 kronor per share represents a premium of 15% from the closing price on June 7.

Embracer last month said it was in talks with potential long-term strategic investors. A rapid pace of acquisitions has helped the company become one of Europe’s largest gaming firms, and it is currently weighing a move to Nasdaq Stockholm’s main market to help broaden the investor base.

The relationship with Savvy will let Embracer set up a regional hub in Saudi Arabia from which it will be able to make investments in the region, Embracer’s chief executive officer Lars Wingefors said in a statement. The proceeds from the share issue will be used to continue its acquisition strategy.

The approval of 60 new titles by the National Press and Publication Administration marks an acceleration from April’s 45 and include entries from studios like Genshin Impact creator MiHoYo Co. China’s two powerhouse games publishers, Tencent Holdings Ltd. and NetEase Inc., were absent from both lists, but analysts see their prospects for approval improving as well.

Shares of Tencent and Netease rose more than 3% on Wednesday, amid a broader surge in Chinese tech stocks. Live-streaming platform Kuaishou Technology jumped 5.8%.

“We are delighted to see established studios such as Perfect World, Shengqu Games, MiHoYo, and Changyou obtained approval titles this time, which we believe could indicate higher possibilities for Tencent’s and NetEase’s titles to be approved in coming batches,” Citi analysts wrote in a note to investors. “The approval announcement will also send positive signal of policy support to the overall China Internet sector.”

Saudi Arabia's wealth fund has made its second $1 billion foray into the Swedish gaming industry this year as part of a drive to build stakes in video game makers and e-sports firms globally.5 hours ago