Tencent is in the process of negotiating a new deal that would increase its stake in Supercell, a Finnish smartphone game developer, to a valuation of around $ 11 billion, according to two people familiar with the talks, The Information reported on December 10.
Tencent will buy back part of the shares held by its partners in a consortium that acquired a majority stake in the 2016 agreement. These partners include, among others, the financial groups backed by the Chinese state Citic Capital, Avic Capital and China Cinda Asset Management. Some investors are disappointed with the outcome of the investment.
For Tencent, the acquisition of a controlling stake in Supercell in 2016 is a bold bet that it can continue to replicate the success of Clash of Clans, a game released in 2012. Analysts said at the time that Tencent could help Supercell’s games find more users in China, the world’s most profitable gaming market.
However, documents filed by Supercell with regulators showed that its revenue declined every year between 2016 and 2020. In 2018, it was reported that some members of TencentThe investor alliance was concerned about its future returns.
In 2019, Tencent increased its stake in Supercell by purchasing shares of other members of the investor alliance and transformed Supercell into its consolidated subsidiary. At the end of last year, Tencent held a 70% stake in Supercell.
There are also signs Supercell is recovering. The company’s Clash Royale has been around for five years, but its revenue last year topped $ 3 billion, according to Sensor Tower, a research firm. In August of this year, Supercell released a new city building game Everdale, as well as a beta.
In addition, TencentThe company’s other overseas investments have brought enormous financial benefits to the company. TencentThe strategic investment of Krafton, a Korean online game developer, has enabled the latter to develop a mobile version of PUBG, which is very popular around the world. Tencent Also owns a 40% stake in Fortnite developer Epic Games, which was recently valued at $ 17.3 billion.
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This year, Tencent has accelerated its global expansion not only by investing in other companies, but also by expanding its business abroad. Last week Tencent setting up of a new international “Level Infinition” game publishing department in Amsterdam and Singapore. In July, TencentTIMI’s game development arm has opened a new studio in Montreal, its third in North America after Los Angeles and Seattle.