Video games: Saudi Arabia acquires 8% of the Embracer group

After its acquisitions from SNK and Nintendo, the Saudi state confirms its interest in video games. The country’s public investment fund has just placed a billion dollars in the future giant that is the Swedish group Embracer.

Embracer definitely never ceases to be talked about. Keen on acquisitions for several years now, the Swedish group has recently made the headlines by appropriating the North American development studios of Square Enix as well as their legendary associated licenses (tomb Raider, Deus Ex…). But this time, it is in the position of the salesman that he finds himself.

The company announces that it has reached an agreement with the investment fund Savvy Gaming Group, a 100% subsidiary of the sovereign wealth fund of Saudi Arabia, to sell it 8% of its shares. The transaction amounts to 10.3 billion Swedish crowns (981 million euros), or 15% above the current share price. The Saudi fund remains a minority in the company, from which it recovers 5.4% of the votes on the board of directors.

Investments multiplying for the Saudi fund

This is a new manifestation of the strong interest shown since the end of 2020 in the video game industry by Prince Mohammed bin Salman. The latter had already obtained control of SNK Corporation in February 2022 (after an initial investment in November 2020) via its MiSK Foundation. As for the Savvy Gaming Group, it already had significant stakes in companies such as Electronic Arts, Take-Two Interactive, Capcom, Koei-Tecmo, Square Enix, and even recently Nintendo.

But where this same Nintendo had been able to content itself with taking note of a stock market operation carried out outside its control, and distance itself by invoking its policy of never commenting on its individual shareholders (no doubt aware that the reputation of Prince ben Salman, whose methods of government are questionable and contested to say the least, has little chance of having a positive impact on his brand image), Embracer has no choice but to welcome open arms this investment. And Lars Wingefors, CEO of the group, to be enthusiastic that this new entry into the capital will allow him to better develop in the North Africa-Middle East region, “one of the fastest growing markets in the world”.

Apart from that, we understand above all that this cash will not be too much for Embracer in the current context. The group’s explosive growth policy is obviously accompanied by extremely high expenses, which explain the major operating losses recorded in the 2021/2022 fiscal year: 353.8 million euros, or 22% of its turnover.

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