Paradox Interactive gets a new major shareholder as the Chinese social media giant buys 5 percent of the company.
Breakit has reported extensively on Paradox’ upcoming IPO (article in Swedish). The games publisher is one of the leading companies within hardcore strategy and simulation games with recent successes like Cities: Skylines and Stellaris.
It’s now clear that Tencent, which runs Chinas largest social network, will become the largest new shareholder, with 5 percent of the company.
Fredrik Wester tells Breakit that Paradox has been looking for a suitable partner in China for a couple of years. Discussions with Tencent has been in secret for a long time. The IPO turned out to be the opening that the Swedish games publisher needed.
“We wanted to attract fans and long-term investors with our IPO. Several executives at Tencent are huge Paradox fans, which is flattering of course”,Fredrik Wester says to Breakit.
The new ownership relation will be strategically important for Paradox, which has had virutally no presence on the Chinese market.
“In the long term it may be an opening for us on the very large Chinese market”, Fredrik Wester says.
Tencent pays $20 million (172 million SEK) for 5 percent of the shares of Paradox Interactive. The goal is that the two companies will work together to capitalize on the Chinese market for strategy, simulation and story driven games.
“We have been looking for an Asian partner. But it’s also good to have a strong industrial owner to do business with if, for example, you are planning for some acquisitions in a few years”, said Fredrik Wester.
Earlier this week it was revealed that Tencent is negotiating to buy a majority stake in the Finnish gaming company Supercell, who are behind Clash of Clans. Tencent is also a major owner of Activision Blizzard, the company that bought the Swedish mobile games company King.
Tencent also has partnerships with companies like Riot Games, CJ Netmarble, and Miniclip, via equity investments or distribution deala. Tencent is one of the world’s largest tech investors. In 2015 the company invested in about 50 companies.
You can read more about Paradox’ financial state here (article in Swedish).