Continuing its aggressive streak of investments lately, Softbank today announced that it has bought additional 22.7 % stake in Finland based mobile gaming company Supercell, taking its total share to 73.2 % on a fully diluted basis.
Under the agreement, SoftBank acquired an additional 22.7% holding in Supercell by purchasing stock held by existing external investors (the “Transaction”). Softbank further mentioned that Supercell would continue to run as an independent company with the current CEO and co-founder of Supercell Ilkka Paananen staying after the transaction.
One of the main external investors it mentioned about is the VC Accel (other being Index, Atomico, and IVP) which was the first and sole institutional venture investor, financing the company in May 2011 with an $11M Series A and has now exited the company completely. The exact amount of transactions taken place is not disclosed by either party.
Supercell which was founded in 2010 has seen staggering growth since its inception in the mobile gaming market with its hugely popular gaming titles such as “Clash of Clans”, “Hay Day”, and “Boom Beach”. According to the popular app data analytic firm App Annie, the three have been ranked as number-one among the highest grossing games for iPad respectively in 149, 128 and 112 countries as of June 1, 2015 (via TechCrunch).
Last year, Supercell saw its revenue triple to 1.5 billion euros ($1.64 billion) whilst profit doubled to 515 million euros, making it the world’s top-grossing company in the sector (as per data by TechCrunch). The growth becomes even more significant if one considers the extremely limited portfolio of games by Supercell as compared to popular sites like Zynga which can be seen struggling today.
It was this growth which had first attracted Softbank, looking to cement its place in mobile content, in 2013 who bought 51% stake in Supercell by collaborating with one of its own portfolio companies, Gungho by paying $1.53 billion. And now by increasing its share in Supercell it clearly has high hopes to further strengthen itself in mobile content market.
In a prepared statement, Softbank said,
Supercell is expected to continue to be a leader in the mobile games industry. SoftBank positions its partnership with Supercell as core to its mobile content strategy and believes that strengthening its relationship with Supercell through the Transaction will further contribute to the SoftBank Group’s growth over the long-term.
On the other hand, the decision of VC Accel behind its divestment in Supercell, despite its huge potential is not clear as one of Accel’s partners Kevin Commoli focused just on their rationale behind initial investment in Supercell in his blog post announcing the divestment.
We believed that well-capitalizing Supercell at an early stage would empower it to control its own destiny and take risks. I became a board member and I am very proud to have been part of the company’s history that most people don’t know about or forget about. Involvement in the earliest days is something all of us at Accel pride ourselves upon
However, given the nature of unpredictability in gaming market with number one games not staying for too long on list, due to changing preferences and tastes of consumers, it will be interesting to see how Supercell uses this investment, which it sees as a way to expand its global reach, to cement its position as a leader in mobile gaming market.