Carlyle, a private equity firm, has hired advisers in order to investigate the possibility of selling its UK video game developer Jagex. The sale could be worth over PS1bn.
According to sources familiar with the matter, Jagex, best known for its RuneScape franchise, has been working with Morgan Stanley bankers and boutique advisory Aream & Co. These people said that the Cambridge-based developer would be able to fetch more than £1bn if it were sold.
The people warned that the discussions are still at an early stage, and that the sale could take place from the end this year to the first half 2024.
The company was previously considered a potential candidate for an initial public offering in the UK. In recent years, several London-listed video game developers, such as Codemasters, Sumo Digital and others, disappeared from UK public markets following takeovers.
Since its founding in 2001, Jagex had been owned by several companies before Carlyle purchased the company for an undisclosed amount two years ago. Jagex claims that over the last two decades, almost 300mn players have played RuneScape – a multiplayer online fantasy game set in medieval times.
Macarthur fortune Holding was the last owner prior to Carlyle. It paid $530mn in 2020 for Shanghai Hongtou Network Technology to purchase Jagex.
Jagex’s latest filings with Companies House show that its revenues for 2021 will increase by 4 percent to £125mn. Profits were down slightly to £37mn due to one-off costs attributed to the sale of the company.
The global gaming industry has seen a rise in M&A activity since the Covid-19 pandemic began in 2020. This is due to the increase in gamers. Apple’s privacy campaign and other new policies have increased the value of scale in advertising, despite the fact that the global gaming market declined last year.
Savvy Games Group , owned by the Saudi Wealth Fund , acquired US-based game developer Scopely earlier this year for $4.9bn. This was the latest gaming investment of the Kingdom.
At the same, private-equity firms are under pressure from their institutional investors to generate cash and exit investments at a moment when the UK is facing a slowdown of public listings.
The number of deals between private equity firms in Europe has fallen to its lowest level since the pandemic, as investors are concerned about the economy and rising debt costs.
According to PitchBook data, in the first quarter of this year the value of private equity deals between rival groups in Europe dropped to its lowest level since the second half of 2020 as buyout houses struggling to agree on price.
Carlyle Morgan Stanley Aream representatives declined to comment.
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