Saudi Arabia Becomes Largest Outside Shareholder of Nintendo

(Bloomberg) --

Saudi Arabia’s Public Investment Fund became the largest outside shareholder of Nintendo Co. on Friday, in the latest move by the Gulf state to lower its reliance on oil.

The sovereign wealth fund now owns 8.3% of the Kyoto-based games company, according to a filing, building up a position that stood just above 6% at the start of the year. That puts PIF ahead of Japan’s Government Pension Investment Fund and behind only Nintendo’s own holding, according to data compiled by Bloomberg.

Under Crown Prince Mohammed bin Salman, Saudi Arabia is making a concerted push to break into the games and esports industry. Most notably, it set up Savvy Games Group under the PIF umbrella with a $38 billion budget and longtime industry veterans in charge. Savvy this week revealed its first foray into China’s games sector with a $260 million investment in a Tencent Holdings Ltd.-backed competitive gaming organizer.

The latest Nintendo stake purchase was made for investment purposes, the filing said. A Nintendo representative said the company doesn’t comment on specific shareholders and PIF didn’t immediately respond to a request for comment.

“It’s tough to bet against PIF due to its size in the market,” UBS analyst Kenji Fukuyama said. “The fund may underpin Nintendo shares if it continues to increase its stake.”

Nintendo marked PIF’s third investment in a Japanese game company that hit the public disclosure threshold of 5%, along with Nexon Co. and Street Fighter maker Capcom Co. in 2022. Its growing portfolio in games and entertainment firms now includes Activision Blizzard Inc., Electronic Arts Inc., Take-Two Interactive Software Inc. and Koei Tecmo Holdings Co., data compiled by Bloomberg show.

“The Nintendo purchase, as well as investments in game companies around the world, is part of Saudi Arabia’s long-term project to become less reliant on oil,“ said Akira Takatoriya, a consultant who works with Japanese companies exporting pop culture content to the Middle East.

The wealth fund’s investments are guided by the Saudi state’s goals for 2030, which include building strategic economic partnerships and bringing home cutting-edge technology. Some of the technologies the PIF has targeted include renewable energy, big data analysis and entertainment content.

PIF is bankrolling the construction of Neom, a futuristic city in northwestern Saudi Arabia, which it plans to market as the region’s first gaming hub. It will house a campus to draw businesses, developers and artists to collaborate on games, marketing documents say.

MBS, who is making attempts to rebuild relations with Washington after the killing of Washington Post columnist Jamal Khashoggi by Saudi agents in 2018, was behind PIF’s $45 billion investment in tech investor SoftBank Group Corp.’s first Vision Fund. That move spearheaded a multiyear effort to obtain footholds in the world’s most prominent startups.

“I think PIF is not even done and wouldn’t be surprised if it continues to increase its stake in Nintendo going forward,” Tokyo-based industry consultant Serkan Toto said.

Saudi Arabia Outlines Plans to Invest $38 Billion in E-Sports

Saudi, Singapore Wealth Funds Bet Big on Korean Content Giant

(Updates with analyst comment from fifth paragraph)

More stories like this are available on bloomberg.com

Author: Takashi Mochizuki and Yuki Furukawa