Tencent has continuously made investments in a large number of emerging companies, mostly in the domestic economy. Well, according to the sources with an intimate understanding of the industry, it is now actively pursuing substantial or even controlling holdings in overseas targets, particularly in gaming industries in Europe.
According to a Reuters report, Tencent is keeping an eye on Europe with the intention of acquiring potential firms in metaverse-related projects. According to a source for Tencent, the company began investing in overseas firms well before any new restrictions were implemented by the Chinese government.
Reuters reported that in order to counteract the slow development in China brought on by the government’s strict limitations, the company changed its mergers and acquisitions strategy to focus solely on acquiring overseas businesses. Though considering its track record over the last three years, reports of Tencent buying another firm, either partially or entirely, are no longer shocking.
Tencent’s acquisition of larger holdings in its existing gaming portfolio or new targets would offer the company a greater voice in such firms’ activities as well as help it acquire the intellectual property rights of popular franchises. Along with having a 40% shareholding in Epic Games, this business also owns stakes in Activision Blizzard, Ubisoft, Krafton, FromSoftware, and other firms.
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Except for its $8.6 billion acquisition of the controlling interest in the developer of the Clash of Clans mobile game, Supercell, Tencent has primarily executed minority investments in Europe over the years. One such agreement saw Tencent buy 9% of British gaming company Frontier Developments.
In August, Tencent announced its first-ever quarterly top-line decline, which was hampered in part by laws that restrict playing time and a shortfall of game authorizations in China. Online gaming revenue fell 1% globally and domestically. Though the business has stressed several times since last year that it wants to increase the percentage of gaming income coming from outside of China to 50% from the current 25%.