Saudi wealth fund makes US$3.3 billion bet on video-game makers

SAUDI Arabia's sovereign wealth fund is pursuing investments in an industry long favoured by Crown Prince Mohammed bin Salman: video games.

The Riyadh-based Public Investment Fund acquired more than US$3 billion worth of stock in three US video-game makers during the fourth quarter, according to a regulatory filing. They include Activision Blizzard, Electronic Arts and Take-Two Interactive Software.

The sovereign wealth fund, also known as PIF, is controlled by Prince Mohammed, who told Bloomberg Businessweek in 2016 that he was part of the first Saudi generation to grow up playing video games.

The crown prince credited video games with sparking ingenuity in the Bloomberg Businessweek profile, while telling The New Yorker in 2018 that his favourite diversion is Call of Duty series, Activision's best-selling franchise.

In November, a subsidiary of the crown prince's charitable organisation, the Mohamed bin Salman Foundation, said it purchased a one-third stake in SNK Corp, the Japanese developer of King of Fighters and Samurai Shodown.

The charity, also known as the MiSK Foundation, said it would increase its stake to 51 per cent in the future.

The sovereign wealth fund acquired 14.9 million Activision shares with a market value of almost US$1.4 billion during the fourth quarter, according to a Form 13F filed with the US Securities and Exchange Commission.

Its other purchases included 7.4 million Electronic Arts shares and 3.9 million Take-Two shares worth about US$1.1 billion and US$826 million, respectively, at the end of December.

Shares of all three game-makers have gained since the third quarter ended, with Activision jumping some 27 per cent, thanks in part to an upbeat earnings report earlier this month.

Electronic Arts is up almost 12 per cent and Take-Two has climbed about 18 per cent since Sept 30, roughly equal to the 17.7 per cent total return for the benchmark S&P 500 index.

The PIF is a key part of the crown prince's plan to diversify the Saudi economy from its dependence on oil. The fund has made several high-profile investments in recent years, including a US$4.4 billion stake in Uber Technologies and big commitments to Softbank Group's Vision Fund.

The total value of the public investment fund's 13F holdings was US$12.77 billion as at Dec 31, up from US$7.05 billion as at Sept 30. BLOOMBERG