Tencent Takes a Ride on U.K. RollerCoaster Game Studio

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  • Frontier Developments based in Cambridge and listed on AIM
  • New stake worth $23.2 million, Frontier to issue new shares

Tencent Holdings Ltd. has taken a 17.7 million pound ($23.2 million) stake in Frontier Developments Plc, a U.K. gaming studio that has recently secured rights from a major Hollywood studio for a new gaming franchise.

Frontier, a small game-maker based in Cambridge and listed London’s junior Alternative Investment Market exchange, is best known for its Elite and RollerCoaster Tycoon franchises.

Tencent, China’s largest internet media company, has subscribed for 3.39 million newly issued ordinary shares at 523.2 pence per share, according to a statement Friday from Frontier. The new shares represent 9 percent of the issued share capital of the company after their issue, making Tencent the largest shareholder behind David Braben, chief executive of Frontier.

Shares in Frontier rose as much as 10.3 percent to 579 pence in London.

"This strategic investment will both help drive our scale up, and improve access and accelerate our growth into the key Chinese market," said Braben.

Revenue from computer games exceeded $100 billion globally in a single year for the first time, while China has overtaken the U.S. as the "gamer capital of the world" in terms of market size, according to a report published by London-based venture capital firm Atomico.

Tencent has also been preparing to roll out its gaming smash-hit Honour of Kings to the U.S. and Western Europe, and is expected to incorporate tie-ups with Warner Bros. Interactive and DC Entertainment in its local versions.

Frontier in February said it has licensed rights from a major unnamed Hollywood studio to develop its third game series "based on an enduring movie franchise of global renown," and is set to reveal more details later this year.

"We believe that gamers in China will become increasingly interested in game genres such as space exploration, theme park management and other segments well-suited to Frontier’s strengths," said James Mitchell, chief strategy officer at Tencent, in a statement.

(Added share price increase.)
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