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Shanda May Increase Fund for China Game Makers, CEO Says

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July 28 (Bloomberg) -- Shanda Games Ltd., China’s third-biggest online games operator, said it may expand a fund that invests in local game developers as the company seeks to offer more titles played on Web browsers and mobile phones.

Shanda is seeking outside investors for its 1 billion yuan ($157 million) 18 Capital fund, Chief Executive Officer Alan Tan said in a phone interview yesterday. The fund, set up by Shanda in 2007, is currently focused on investments in developers of games for Web browsers and mobile phones, he said.

Tan is developing slimmed-down versions of Shanda’s most-popular games including “World of Legend,” played mostly by users who download the software to personal-computers, to expand their appeal among more casual Web surfers and smartphone owners. The Shanghai-based company is also working with Chinese Internet firms including Baidu Inc. and Renren Inc. to expand distribution of its titles in the world’s biggest online market.

“We want to be China’s leading operator and developer of mobile games,” Tan said. Still, games played on phones probably won’t make a “clear contribution” to revenue immediately, Tan said, without providing figures.

Shanda fell 0.9 percent to $3.19 at 3 p.m. in New York trading. The stock has fallen 18 percent this year, trailing Chinese online game companies Tencent Holdings Ltd. and NetEase.com Inc.

Tencent, China’s biggest Internet company, accounted for 43.6 percent of China’s online games market in the first quarter, according to a July 16 report by BOCOM International. Second-ranked NetEase had 15 percent market share, ahead of Shanda’s 10.8 percent, according to BOCOM.

Shanda’s 18 Capital fund had invested 700 million yuan as of the third quarter of 2011, according to its website. Shanda has more than $400 million of cash, Tan said.

Tan said the introduction of new browser and mobile games will help boost players at Shanda, without providing figures. In the first quarter, Shanda had an average of 19.1 million active users a month, 4.3 million of which are paying customers, the company said in June.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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