At the moment, Chinese tech giants are exploring ways to evade regulatory pressures in their home country.
After seeing significant declines in its home business, multinational conglomerate company Tencent is seeking to acquire overseas gaming companies. The company is the world’s largest game vendor, with large investments in more than 800 companies. It boasts of significant investments in Riot (100%), Supercell (84%), Grinding Gear Games (80%), Epic Games (40%), Ubisoft (5%), and Activision-Blizzard (5%).
Tencent Seeks Investments in Overseas Gaming Companies
Citing familiar individuals with the acquisition matter, Reuters noted that Tencent is “aggressively seeking” to own majority stakes in more gaming companies overseas. The multinational company is resetting its M&A strategy to focus on international gaming firms, especially in Europe. Notably, Tencent is shifting to overseas gaming assets amid scrutiny by Chinese regulators. The technology and entertainment company has found itself under China’s regulatory eyes for operations and monopoly in its home country. Now, Tencent is relying on its overseas gaming assets for its future growth. The company confirmed that it is looking for innovative firms and talented management teams.
It is evident Tencent is ready to take the bull by its horn with its overseas gaming assets acquisition. The company increased its stake in video game company Ubisoft last month. Citing a press release, Coinspeaker reported that the company acquired a 49.9% stake in Guillemot Brothers Limited, which is Ubisoft’s largest shareholder. Notably, Tencent previously had a 4.5% stake in Ubisoft. The deal is worth €300 million, including a €200 million share acquisition and a €100 million capital raise. Ubisoft CEO Yves Guillemot acknowledged that “Tencent is a key shareholder partner for many of the industry’s leaders who have created some of the most outstanding video games.”
Chinese Tech Firms Battle with Regulatory Crackdown
At the moment, Chinese tech giants are exploring ways to evade regulatory pressures in their home country. The crackdown has been going on for about two years and has impacted sales and led to massive stock selloffs. According to Tencent, the company has been investing abroad even before the regulatory crackdown.
Furthermore, a source told Reuters that Tencent is looking to snap up global assets related to Metaverse. The firm’s chief strategy officer, James Mitchell, spoke about the acquisition shift in a post-earnings call in August. Mitchell said the company would continue to acquire new game studios outside its home country.
“In terms of the game business, our strategy is … to focus on developing our capabilities especially in the international market. We will continue to be very active in terms of acquiring new game studios outside China.”
In September, Tencent Music Entertainment Group announced that the proposed secondary listing of its Class A shares would begin to trade on the Main Board of the Stock Exchange of Hong Kong by way of introduction.