Supercell’s acquistion signals the Asian buying spree to come

Supercell’s acquistion signals the Asian buying spree to come

October 16, 2013

by Francisco Yu

The Mobile gaming world has been buzzing lately by the news that Supercell of Finland was acquired by Softbank and GungHo of Japan for $1.5 billion. This would value the Supercell at roughly $3 billion, not bad for a game company with only two games. As I wrote in a previous column, Supercell is an exceptional studio so news of the investment was not as surprising as the fact that it took this long for anyone to acquire the studio.What is interesting is that the acquirers are Japan’s SoftBank and game studio GungHo rather than the usual US social media or game conglomerates that made news in the past. Of course this trend is in line with previous recent news that Asian companies are on a mobile game buying spree: Chinese, Korean and Japanese companies have made an effort this year to go beyond national boundaries and expand their markets into the growing mobile markets around the world. This latest news confirms the trend is still going strong.

One could have seen some indications of this future relationship on Supercell’s own games which for the last few months had close cross promotion with Gung Ho’s Puzzle and Dragons within their game. The courting of this deal probably began months ago when ads (the only one) for Puzzles and Dragonswere appearing in the bulletin section of the game Clash of Clans. The acquisition based on some details given is more than just a monetary decision but one of compatible cultural values on management and content quality.

This recent investment has upped the stakes for valuations of game studios, dwarfing past acquisitions like NGMOCO, Playdom, and Playfish. Even the PopCap acquisition at $1 billion seems small in comparison. Facebook’s acquisition of super high growth Instagram for $1 billion is smaller as well.

As mentioned in my previous column, a China (or other Asian countries) probably won’t be ready to create a studio like Supercell for another couple of years. The market seems to agree, and its answer to this situation is for Asian companies to buy game studios outside of Asia to accelerate the process.

Expect more acquisitions by Asian companies in the future to continue and maybe some, but fewer, in the other direction.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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