As Beijing cracks down on gaming, Tencent increases global investment

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Tencent Holdings Limited Update

As Beijing tightens its regulatory review of technology groups, Tencent’s investment in overseas start-ups has increased more than sevenfold this year, accelerating the global expansion of China’s most valuable company.

Refinitiv data shows that the social media, gaming and financial technology group has reached a record 16 transactions in Europe, bringing its total international investment in the first six months of 2021 to 34. In comparison, there were four overseas transactions in the same period in 2020 and three in the same period in 2019.

Tencent’s overseas expansion coincides with Chinese regulators Blow In many of its core business areas, such as games. Daniel Ahmad, a game analyst at Niko Partners, said: “China’s stricter regulation and declining growth rate have led to more Chinese companies targeting overseas markets as a whole.”

Most of Tencent’s transactions in Europe are in the gaming sector. The UK branch of Miniclip, a subsidiary of the Swiss-based gaming website Tencent, acquired Dutch studio Gamebasics in January. Miniclip also acquired a majority stake in Romanian studio Green Horse Games in February for an undisclosed amount.

In the first half of the year, while expanding its international business, Tencent also participated in multiple rounds of financing involving start-ups in Singapore, India, Japan, South Korea and Australia.

“Tencent’s international game revenue is growing faster than domestic revenue and currently accounts for 25% of online game revenue. I think we may see more investment in this area in the future,” Propitive Research analyst Wium, who published an article on the Smartkarma platform Malan said.

Many of Tencent’s European transactions in countries such as the United Kingdom, Germany, the Netherlands, and Romania are conducted through subsidiaries. Analysts said that this may be to avoid public scrutiny.

Tencent’s negotiations to acquire German game developer Crytek through a subsidiary this summer became the subject of news reports about potential security issues. Crytek did not respond to a request for comment.

Mark Natkin, founder of Marbridge Consulting, a Beijing-based technology research firm, said that in markets such as the United States, the United States, Europe, and Australia, “worries about Chinese technology have been very effective.” “It may be prudent to make an acquisition through a more layered approach with less attention.”

This Chinese technology group often selects local entrepreneurs or executives to lead the overseas business it invests in.It already has Finnish Supercell, Popular creator racial conflict.

“Tencent invests in a’silent’ way, which means that they will not rename their portfolio companies, but let these companies continue to excel, which first makes them attractive to Tencent,” Ahmed said .

Tencent’s Hong Kong-listed shares were hit early this week after the official Chinese media announced the new rules, under which children can only play online video games Three hours a week.

Hawick Lau, President of Tencent Warning investors Last month, he predicted that the regulatory pressure on Chinese technology companies would intensify. After the official media called the game “mental opium”, Tencent has imposed restrictions on how long minors can play online games.

Kelvin Ho, director of Fitch Ratings International, said that “China’s tightening regulatory environment may be another factor driving Tencent’s international transactions”.

However, according to data from Niko Partners, as of August 20, 56 of Tencent’s 77 investments or acquisitions in the gaming sector were in Chinese companies.

Tencent has Emphasize its contribution With the escalation of regulatory pressures, the Chinese society has indicated to the Chinese society that it had set aside 50 billion yuan ($7.7 billion) for the “Common Prosperity Plan” last month. It also deployed facial recognition technology to police young people who played online games for a long time.

Tencent declined to comment on its overseas transactions.

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