Saudi wealth fund makes second $1bn bet on Swedish gaming

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

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

The PIF, as the $500bn 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 per cent stake in Nintendo Co., marking its third investment in a Japanese games company.

Read: Saudi Arabia’s PIF adds to games push with 5% Nintendo stake

The announcement of a rights issue directly to Savvy sent Embracer’s shares up nearly 10 per cent during early trading in Stockholm on Wednesday. As a result of the deal, PIF will take an 8.1 per cent stake in the Swedish company for SEK10.3bn ($1.05bn). The price of SEK103.47  per share represents a premium of 15 per cent 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.