Is This Why Saudi Arabia Made a Huge Investment in Nintendo?

Investment in the gaming space, including M&A, has hit record levels this year. While large acquisitions have made most of the headlines, direct, non-controlling, investment in gaming companies have also been on the rise.

It was revealed last week that Saudi Arabia, through its Public Investment Fund (PIF), now owns 5.01% of Nintendo, making it the Japanese gaming giant’s fifth largest investor.

Based on Nintendo’s recent market capitalization, the Saudi investment is worth nearly $3 billion. Notably, the investment by PIF may have been made in the open market, as a Nintendo spokesperson (as stated to Bloomberg) learned of the investment via public news reports.

The Nintendo investment is just one of many moves the PIF has made in the video game industry. Earlier this year, the PIF took 5% stakes in both Capcom and Nixon, after having invested roughly $3 billion in Electronic Arts, Activision-Blizzard and Take-Two Interactive back in 2020.

There is speculation in the market that Saudi is making these large video game investments to take advantage of consolidation (M&A premiums) in the industry. It’s investment in Activision-Blizzard, for example, stands to be a huge winner should the Microsoft acquisition deal finalize.

The Microsoft/Activision deal was announced back in January, with Microsoft offering a 45% premium for the stock (compared to the ATVI closing price pre-announcement).

With such high premiums being paid for gaming companies, it makes sense for Saudi to get in on the action. Individual investors may to want to consider at least some exposure to the sector, especially as the industry is in boom mode.

Read more about the Saudi/Nintendo deal, HERE

Or see which video game companies could be the next buyout targets, HERE