Saudi Crown Prince Acquires KOSDAQ-Listed Game Company SNK... Oil Money Targeting Korean Games

KOTRA: "Domestic Game Companies Have a Great Opportunity to Expand Not Only to Saudi Arabia but Also to the Middle East Market"
Stock Market: "SNK Expected to Strengthen Competitiveness Through Structural Improvement... Anticipating Investment in Domestic Game Industry"

[Asia Economy Reporter Lee Seon-ae] The KOSDAQ-listed gaming company SNK has finally come under the wing of the Saudi Arabian Crown Prince. Although the payment for the stock transfer contract was delayed for more than two months, investor concerns heightened, but on the 24th, the 'transfer payment' was completed. This is the first time that the Saudi royal family's 'oil money' has been invested in a domestic listed gaming company. The securities industry expects that SNK will undergo structural improvements due to the large-scale investment execution by the Saudi royal family, and furthermore, domestic gaming companies' entry into the Middle Eastern market will gain momentum.

According to the Korea Exchange on the 25th, SNK announced after the market closed the previous day that the largest shareholder changed from Zuikaku to Electronic Gaming Development Company (EGDC). EGDC, which became the largest shareholder, now holds 7,013,579 shares, accounting for 33.30% of the shares. The acquisition amount is 207.34572 billion KRW. At the extraordinary general meeting scheduled for April 6, the appointment of executives will take place. Additionally, EGDC plans to acquire an additional 3,727,939 shares (17.7%) through a public tender offer if certain pre-agreed conditions are met three months after the stock transfer transaction closing date. Afterward, EGDC's stake in SNK will reach 51%.

EGDC is 100% owned by the MiSK Foundation, established in 2011 by Saudi Crown Prince Mohammed bin Salman.

Why did the Saudi Crown Prince insist on SNK? The gaming and securities industries believe it is related to eSports being selected as an official event at the Asian Games and Riyadh, the capital of Saudi Arabia, being chosen as the host city for the 2034 Summer Asian Games. The Olympic Council of Asia (OCA) selected eSports as an official event at the '2022 Hangzhou Asian Games.' Although the specific game titles have not been decided, it is highly likely that a company involved in efforts to secure eSports as an official event alongside the Asian eSports Federation was chosen. SNK is one of those companies.

The Crown Prince's determination to grow Saudi Arabia's gaming industry is strong. Saudi Arabia, led by the Crown Prince, is pursuing industrial diversification through 'Saudi Vision 2030' and is actively investing in the gaming industry. The Saudi Public Investment Fund (PIF), an investment group led by the Crown Prince, has acquired stakes in three major U.S. gaming companies, with total investments reaching 3.3 billion USD. As an extension of this, they have acquired a 33.3% stake in SNK.

Kim Tae-min, head of the KOTRA Saudi Riyadh Trade Center, said, "The Crown Prince's investment in SNK is expected to open up possibilities for Korean games to enter the Middle Eastern market." He added, "Since the mobile game market in Saudi Arabia is not yet mature, it is evaluated as having great potential for entry and development. If the language is properly localized into Arabic, it will be a good opportunity to expand not only in Saudi Arabia but also in the Middle Eastern market."

If the acquisition of gaming companies is to actively foster the Saudi gaming industry, there is a possibility that other gaming companies besides SNK will be considered. A securities industry official said, "The Middle Eastern gaming market is a market with high demand in terms of growth and potential. If the Crown Prince is leading acquisitions of gaming companies, it is highly likely that large-scale investments in the domestic gaming industry will be made in the future."

Given the unprecedented large-scale injection of oil money, SNK's structural changes are also a focus. SNK is targeting the Asian region including Korea, Hong Kong, China, Japan, and the global market including North America through various IPs (intellectual properties) such as The King of Fighters, Samurai Shodown, Metal Slug, Fatal Fury, The Last Blade, Beast Busters, Garou: Mark of the Wolves, and Days of Memories. With the large-scale capital injection, there is a high possibility of securing growth momentum by developing in-house titles or acquiring popular IPs. As SNK is reducing its dependence on IP licensing, the inflow of oil money is expected to be a positive factor. Investor interest continues due to these prospects, and the stock price is trending upward. On November 26 last year, when the stock transfer contract announcement involving the change of the largest shareholder was made, SNK's closing price was 12,700 KRW. On the previous day, it closed at 29,000 KRW, marking a stock price increase of 128.3%. On the 25th, the market price was 33,000 KRW, and it even surged to 35,500 KRW in early trading.

SNK is regarded as a company that represents the rise and fall of the Japanese gaming industry. The original SNK, the predecessor of the current SNK, was established in 1973 and gained worldwide popularity by producing hit titles such as The King of Fighters and Metal Slug. However, after the mid-1990s, as the gaming industry's focus shifted from arcade machines to PC and console games with the spread of PCs, SNK declared bankruptcy in 2001. The current SNK is a company spun off by dividing the game IPs owned by the former SNK, and was acquired by the Hong Kong corporation Zuikaku in 2015. SNK first attempted to list on the domestic stock market in 2017, withdrew once, and finally succeeded in listing on the KOSDAQ market in May 2019.

This content was produced with the assistance of AI translation services.