(Bloomberg) — Nintendo shares rose as much as 3.9% after an executive at a Saudi Arabian sovereign wealth fund told local media it was considering increasing its stake in the Japanese game company.
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Shares outperformed the market, their biggest gain in a week, after Kyodo News reported that the Arab Gulf state’s public investment fund is considering increasing its capital injection into Nintendo and its peers. Prince Faisal bin Bandar, vice chairman of PIF subsidiary Sabee Games Group, said he supported making such a move with the support of the companies themselves.
The Saudi government is keen to make the kingdom a player in the global gaming industry and diversify its portfolio, which is heavily dependent on oil. The company is betting $38 billion on the country’s potential to become the next center of the video game industry, betting on content providers in Japan and South Korea. The company pitches itself as a long-term investor with the patience to wait out fallow periods in a volatile industry where hits are never guaranteed.
PIF, which had about $760 billion in assets under management as of the end of last year, is already one of Nintendo’s largest shareholders with an 8.6% stake, according to data compiled by Bloomberg. The fund has previously placed multibillion-dollar bets on other gaming and esports companies, including Tencent Holdings, Activision Blizzard (now part of Microsoft), and Kakao Entertainment Corporation. I’m going. Also includes other gaming sector stocks held by PIF in Japan. It also rose on Monday morning. Nexon rose as much as 3%, Capcom rose 2%, and Koei Tecmo Holdings rose 2.8%.
“It’s noteworthy that Saudi Arabia is doing this as part of its national policy,” said Ryotaro Sawada, a senior analyst at the Tokai Tokyo Intelligence Institute. “We hope to see this kind of interest spread.”
Saudi Arabia is also stepping up efforts to encourage gaming and technology companies to set up offices in the Middle East as part of its efforts to attract artists and animators to the region and create unique content. Injecting billions of dollars into tourism, PIF is supporting the development of a theme park on the outskirts of Riyadh featuring characters from the fictional world of the popular Japanese manga and anime series Dragon Ball.
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The increased stake in the hands of Saudi Arabia’s wealthy funds should be a big problem for Nintendo, as it aligns with the Kyoto-based company’s goal of getting more people to play its games around the world. No, said Tomoaki Kawasaki, a senior analyst at the company. Wycosmo Securities. “Strengthening ties with Saudi Arabia could mean new growth opportunities in Saudi Arabia and other markets,” he said.
–With assistance from Vlad Savov.
(Updates with analyst comment)
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