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Private equity group Carlyle is to sell UK video games maker Jagex to Europe’s CVC Capital Partners in a deal estimated at just below £1bn as interest in the industry heats up.
US-based Haveli Investments, set up in 2021 by Brian Sheth, formerly of Vista Equity Partners, partnered with CVC in the agreement to buy Cambridge-based Jagex, which is best known for the long-running RuneScape franchise.
Financial details were not disclosed but three people familiar with the matter said the deal was worth about £910mn. The Financial Times in September reported Carlyle was exploring a sale.
RuneScape, a multiplayer online game set in a medieval fantasy world, has 2.4mn active subscribers and 1mn free-to-play users, according to the companies. It has been running since 2001.
“The business is now well placed to build upon its position as one of the most exciting games developers today,” said Andrew Tan, a principal at Carlyle, who is focused on European technology and media.
The video gaming sector had “huge potential”, said Phil Mansell, chief executive of Jagex. He added that support from the new owners gave him confidence the company could “continue to enhance our platform for the good of both our existing valued gamers and potential new gamers yet to experience our products”.
The deal comes as mergers and acquisitions have in recent years picked up in the gaming sector, which received a boost from homebound players during the Covid-19 pandemic.
Saudi Arabia in particular has spent billions of dollars in a push to dominate the global industry, with its wealth fund-owned Savvy Games Group leading its deals. Savvy last year bought US-based games developer Scopely for $4.9bn. The biggest-ever deal in the video games industry was Microsoft’s $75bn acquisition of Activision Blizzard, which closed in October.
Jagex was once seen as a candidate for a UK initial public offering. However, several London-listed video games developers, including Codemasters and Sumo Digital, have in recent years disappeared from the UK public markets after being taken over.
Nick Clarry, managing partner and head of CVC’s sports, media and entertainment team, said the company planned to improve the RuneScape games as well as their accessibility on various platforms. It also aimed to invest “to create the exciting games of tomorrow”, he added.
Sheth, chief investment officer at Haveli, called Jagex “among the most innovative and creative companies across gaming, with a large and loyal player base”.
Carlyle acquired the company in 2021 for £502mn, according to a filing on the UK’s Companies House. Founded in 2001, Jagex has had several owners, including asset manager Macarthur Fortune Holding, its most recent before Carlyle. Macarthur paid $530mn to buy Jagex in 2020 from Shanghai Hongtou Network Technology.
Jagex in 2022 acquired Gamepires, the developer of the open-world survival game Scum, and Pipeworks Studios, adding game development expertise and a games-as-a-service platform.
In its latest filings to Companies House, the UK video game publisher reported a 4 per cent rise in annual revenues to £125mn in 2021. Its operating profit slipped slightly in the same year to £37mn because of one-off costs attributable to the company’s sale.
Morgan Stanley and boutique advisory Aream & Co were financial advisers for Carlyle. Goldman Sachs advised the vehicle to be funded by CVC Capital Partners Fund VIII and Haveli Investments.
The deal is subject to regulatory approvals.
