Jagex Reportedly Sold to Carlyle Group; Tencent Acquires Klei Entertainment

TheGamingEconomy’s Daily Digest brings you the prevalent business stories in gaming. In today’s news: Jagex reportedly sold to Carlyle Group; Tencent acquires Klei Entertainment; and IzanagiGames raises JP¥166.8m (£1.189m).

Jagex reportedly sold to Carlyle Group

Runescape developer Jagex has been sold to US private equity firm The Carlyle Group, according to a report published by The Telegraph. While the sale has yet to be confirmed by either party, a Jagex spokesperson has confirmed that six members of the Carlyle Group board, including Ashley Evans (Managing Director of Technology) and Tyler Parker (Vice President of Buyouts). Financial terms of the mooted acquisition have yet to be disclosed, however the sum is thought to exceed the USD$530m (£387m) paid by current owner Macarthur Fortune Holding, less than twelve months after it bought the Cambridge-based developer in April 2020.

A statement issued by Jagex reads, "We’re delighted to welcome the new board directors to Jagex and proud to have their expertise, counsel, and support on our side as we look forward to a hugely exciting year for Jagex, the RuneScape games, and beyond. We’ll be talking more about the appointments in the days to come."

Update - 25th January 2020, 11:23: A second US private equity firm, Plutos Sama Holdings, Inc. has filed a case requesting injunctive relief in the Federal Court of California, alleging that it acquired 55% of Jagex via an auction conducted in September by Huarong Trust, the parent entity of Shanghain Hongtou Network Technology Co. Ltd., which is the previous owner of Jagex prior to Macarthur Fortune Holding. This case follows a legal dispute in the England and Wales High Court in July 2020, in which it was revealed that the original sale to Macarthur Holding Group's Platinum Fund vehicle is disputed, and the latter was looking to sell Jagex immediately for USD$686.7m (£501.8m).

Update - 25th January 2020, 12:30: Jagex has confirmed that it has been acquired by The Carlyle Group, though terms of the acquisition have not been revealed. Phil Mansell, CEO of Jagex, commented, "I am so proud that Jagex is teaming up with Carlyle, a prestigious investment group that believes in the potential of Jagex, our vision for growth, and will support us in accelerating our multi-year growth strategy. We will continue to expand our game teams to create and deliver more great content for RuneScape and Old School RuneScape. We will continue to create exciting experiences for our players, grow our global communities, build new games to expand and further explore the RuneScape universe, lend our expertise to publish third-party games from like-minded online game developers, and invest in the incredible tech and talent that powers this all."

Tencent acquires Klei Entertainment

Tencent Klei

Tencent has acquired a majority stake in Canadian studio Klei Entertainment, best known for titles such as Don't Starve; Mark of the Ninja; and Oxygen Not Included. Financial terms of the acquisition have not been disclosed. According to statements released by the Vancouver-based acquiree, there will be no initial changes to in-progress projects, nor any redundancies.

In a blog post released on the Klei Entertainment forums, Founder Jamie Cheng hinted that the rationale for selling was to ensure the financial security of the studio going forwards, stating, "Klei has been around for 15 years, and we have made many changes over the years in order to respond to a changing world. Consistently, my wish has been to enable people to do their best creative work, to learn and grow, to not have to worry about finances, and be able to enjoy their lives outside the studio. This has not changed. This partnership helps us navigate a changing industry, and helps us focus on what we do best: making unique experiences that no one else can."

In further news from Tencent, its mobile subsidiary TiMi Studios is set to invest CN¥1bn (£112.6m) towards its Honor of Kings esports ecosystem. As part of the initiative, the prize pool for its grassroots competition will climb by 353% to CN¥6.5m (£732,100), while the global Honor of Kings Champion Cup (KCC) prize pool will increase by 56% to CN¥32m (£3.6m).

IzanagiGames raises JP¥166.8m (£1.189m)


Japanese studio IzanagiGames has announced that it has raised JP¥166.8m (£1.189m) via the issuance of new shares to the Colopl Next No.4 Fund Investment Partnership and Akatsuki Inc., taking its total funding to JP¥368.8m (£2.597m) to-date. The latest tranche is set to be used by the Tokyo-based outfit for recruitment and for greater development resource on its upcoming projects, with aims to produce a "series" of hit titles.

Following the share allocation, the Colopl Next No.4 Fund Investment Partnership and Akatsuki Inc. join Shinsuke Umeda (IzanagiGames Founder and CEO), Makers Fund, and NetEase, as significant shareholders in the company. According to investment data tracked by the TGE Index, funding for Japanese video game companies exceeded USD$1.425bn (£1.041bn) over the nine month period ended 31st December 2020.