Saudi’s PIF buys $1bn stake in Sweden’s Embracer gaming group

Saudi Arabia’s Public Investment Fund (PIF) is taking a stake in Swedish video game maker Embracer one month after investing in Japan’s video game giant Nintendo.

Saudi Arabia’s sovereign wealth fund made its fourth investment in the gaming sector so far this year.

PIF is investing $1 billion to purchase 99.9 million B-shares in Embracer. It is investing in its own Savvy Gaming Group (a gaming and e-sports group PIF set up in January).

Brian Ward (below), CEO of Savvy Gaming Group, said, “The Embracer team has built a truly unique and leading ecosystem of entrepreneurs and creators at a scale which we believe will continue to generate enormous value for the games community in the coming years,”

As part of Saudi Arabia’s economic diversification, Last month, the $500-billion sovereign wealth fund acquired a 5.01 percent stake in Japanese gaming company Nintendo.

The Nintendo stake follows the PIF’s recent disclosure of stakes in two other Japanese gaming companies – Nexon and Capcom, which the fund disclosed in February.

“Savvy Gaming Group will enable us to set up a regional hub in Saudi Arabia, from which we can make investments across the MENA region, organically, via partnerships, joint ventures, or via acquisitions of companies led by strong entrepreneurs.” Lars Wingefors, founder and chief executive of Embracer, commented.

“I think it’s an investment spree to diversify their portfolio out of oil and energy,” Nazih Fares, head of communications and localization at 4 Winds Entertainment, a games publisher, said.

“But when you compare it to the rest of the Gulf, especially UAE, the Saudi funds are in general a bit late on making an international impact on their ‘brand.’ Look at all the big football and other sports teams sponsored by UAE or Qatari brands, for example.”

Resume “the rush to get to that level for Saudi Arabia will take longer, but “investing directly in big brands will help catch up on that diversification of revenue generated by those same international companies.”

“The $1 billion investment is part of its strategy to have a diverse range of forward-looking shareholders who support its long-term business plans,” Fares explained.

Over the past few years, Saudi-based entities have become one of the most significant investors in the global gaming market. The games market in MENA is one of the world’s fastest-growing, with $5.7 billion in 2021 revenues and more active gamers than either the US or Western Europe.

Lars Wingefors said, “The largest country in this market, by far, is Saudi Arabia, and having visited Saudi Arabia, I have seen the gaming community and the opportunities firsthand,”

According to the Boston Consulting Group (BCG), Gaming consumption in Saudi Arabia is estimated to reach $6.8 billion by 2030.

BCG report stated, “These figures point to plenty of untapped potential as more young Saudis pursue careers in game development, management, and esports competition,”

It is worth mentioning that Last year, the PIF boosted its stake in US video game maker Activation Blizzard to $15.9 billion.

“The gaming ecosystem in the MENA region is exciting on several levels, primarily due to the sector’s expansion mechanics and growth velocity – we are experiencing sustained year-on-year growth to the tune of CAGR 15.8 percent.” Matthew Pickering, CEO of Power League Gaming (gaming and esports agency).

Combined with a youthful, hyper-engaged regional population with fast tech adoption rates and high levels of mobile penetration, this presents “exciting opportunities for further sustained development and provision of experiences by agencies and publishers alike to deliver value for gamers and brand partners and sponsors alike.”