Over the last few years, Saudi Arabia has shown it has an increasing desire to diversify its investment portfolio within the video game industry. Its latest investment in both Capcom and Nexon is said to be valued at over 1 billion.
According to Bloomberg, the 5% purchase of Capcom is valued at approximately $332 million at current stock prices, while the 5.02% in Nexon is valued at roughly $883 million. Capcom is known for its Monster Hunter and Resident Evil franchises, while Koren-based Nexon is best known for Dungeon Fighter and its online RPG MapleStory. These stock purchases are being described as "pure investment" opportunities as opposed to any preliminary takeover moves. Shares in Osaka-based Capcom rose as much as 1.7% after the announcement, while Nexon shares rose more than 3% in Tokyo trading.
Saudi Arabia is using its "Public Investment Fund" (known as PIF), a $500 billion sovereign wealth fund used to diversify the nation's economy beyond just oil and gas, to purchase the shares. The PIF is one of the largest sovereign wealth funds in the world with the goal "to create new sectors, companies, and jobs" within the nation, and is chaired by the controversial Saudi crown prince Mohammad bin Salman.
Over the last few years the PIF has invested in Electronic Arts Inc., Take Two Interactive Software Inc., and through PIF subsidiary Savvy bought two of the largest Esports leagues in the world (ESL and FACEIT) for a combined price of $1.5 billion. These two have since merged into a single organization called ESL FACEIT Group.
The Public Investment Fund has set aside approximately $10 billion to buy additional global stocks. It already has stakes in Uber, Live Nation Entertainment, and an 80% share of soccer club Newcastle United FC in England. Interestingly, last year Nexon invested $874 million into a handful of entertainment companies, funding Konami, Sega Sammy, Bandai Namco, and Hasbro. It diversified its portfolio even further by purchasing $100 million worth of Bitcoin and recently invested $400 million in AGBO, Joe and Anthony Russo's independent film production company.
Mohammed bin Salman is said to be a big fan of video games, with Call of Duty being his favorite, and that is probably why the PIF purchased 37.9 million shares of Activision Blizzard Inc. in late 2020. This particular investment was losing money until Microsoft Corp. agreed to buy out the studio behind the Call of Duty series. In 2020, bin Salman's own Electronic Games Development Company purchased a controlling stake in the fighting game developer SNK, famous for games like The King of Fighters and Samurai Shodown, worth approximately $223 million.
Saudi Prince Mohammad bin Salman has a notorious history. He has been linked to the assassination of Washington Post journalist Jamal Khashoggi and blamed for numerous human rights violations within his country, including the continued criminalization of homosexuality where punishments run the gamut from whippings to execution.
Source: Bloomberg