13 May — 19 May / 2024

Weekly News Digest #20


# of announced deals
announced deals’ size
# of closed deals

EQT to Acquire Keywords Studios for $2.8B
100 Funds Investing In Video Games Companies


20 Title

EQT to Acquire Keywords Studios for $2.8B

Sweden-based private equity firm EQT is in advanced discussions to acquire UK-based outsourcing company Keywords Studios (LON: KWS) for approximately $2.8B (£2.2B). The proposed offer of £25.50 per share represents a substantial premium of approximately 73% over Keywords’ closing share price of £14.70 last Friday. In the joint statement, Keywords Studios confirmed the ongoing discussions with EQT. Let’s dive a bit further into the potential deal.

Keywords Studios — the largest outsourcer of the industry

Keywords Studios is a premier provider of technical and creative services to the video game industry. Today, the company is an all-in-one service provider that can assist studios during each stage of the game production.

In 2023, the studio generated $844m (€780m) in Revenue and $139m (€109m) in EBITDA, representing the multiples of 3.3x EV/Revenue and 20.1x EV/EBITDA.

The company’s revenue grew 48.76x over ten years. Keywords’ active M&A strategy facilitated a big part of this growth. Since 2019, the company has closed 30 deals to expand its capabilities and add new technologies and services to its offer.

As a result, Keywords has become the biggest outsourcing company in the video games industry. It operates over 70 studios with over 12,000 people across three divisions: Create, Globalize, and Engage:

— Create: focuses on production, employs 4,500 people;

— Globalize: dedicated to testing, localization, and audio services, has a workforce of 5,000;

— Engage: handles marketing and player engagement and employs 2,500 individuals.

One prime example of its dominance is that its services were used in 13 out of the 18 winning titles (72%) at the 2023 Game Awards, including the two most rewarded games: Baldur’s Gate 3 and Alan Wake 2.

Screenshot 2024 05 21 At 01.46.01

Source: Keywords Studios 2023 FY Results Presentation

We’ve been writing about Keywords Studios for quite some time, so feel free to explore our backlog of articles on the company on InvestGame’s website.

Strategic Rationale

In Oct’22, EQT, known for its strategic investments in the technology and media sectors, completed the $7.5B merger with Baring Private Equity Asia (BPEA). BPEA, in turn, owns a significant stake in Virtuos, one of the largest work-for-hire studios globally. In Sep’21, BPEA was a leading investor in Virtuos’ $150m funding round. Thus, acquiring Keywords Studios can significantly increase EQT’s presence in the gaming industry.

Since the rise of advanced artificial intelligence in 2023, much discussion has been about its potential to transform and optimize many production processes in the video game industry. AI models can improve art production, fully cover multi-language localization, and assist in programming, among many other scenarios. In theory, this might negatively influence the demand for the company’s services. 


Keywords Studios share price dynamics. Source: Yahoo Finance

This threat, along with the overall macroeconomic instability and low multiples on the markets, has resulted in a significant decline in the company’s market capitalization. This is why the premium might reflect Keywords’ belief that the stock price should have been closer to that before the plummet. As mentioned above, Keywords rejected four previous offers from EQT because of the low offers.

The current proposal represents a significant increase compared to the previous ones. Keywords highlighted the strategic alignment and growth opportunities that could arise from this deal, so the offer has all the chances of being taken if EQT makes it official. The company has until June 15th, 2024, to confirm.

The other potential scenario is that someone will try to outbid the EQT. For example, we have already seen this happen with Codemasters, another UK-based gaming company. In Dec’20, Electronic Arts outbid Take-Two’s offer and acquired Codemasters for $1.2B.

With AI challenges, outsourcing still makes a lot of sense in 2024, so more bidders might appear. Unlike the majority of companies in the gaming industry, service providers do not necessarily depend on hits. There is nearly always a demand: growing development budgets and massive layoffs make outsourcing one of the best solutions for cutting costs today.

Expanding into the gaming industry through a service company might be one of the safest ways for EQT in times of uncertainty. With constant demand, there is less risk of failure, while there are many potential benefits from the industry’s future recovery. Since deals like that are possible today, this recovery might be closer, and “Dog Days” might soon be over.

Gaming Focused Funds

100 Funds Investing In Video Games Companies

Last month, we introduced a new feature on our website: the list of Gaming-Focused Funds. Today, we’re thrilled to announce a significant update to this section: we added more funds and updated the design to help you navigate the investment market more efficiently. Check out the updated list here.

To maximize your fundraising efforts, we have a special offer: for just $25 a month, you can get an extended table that aids your entire process, from finding LinkedIn profiles and fund emails to understanding their origin and specialization.

Join our Patreon and gain an advantage today!


We want to thank MGVC and Xsolla for supporting this digest.


Mergers & Acquisitions

Swiss-based Sphaira Innovation has acquired UK-based developer and insights firm Playmob for an undisclosed sum. The acquisition formalizes a long-running relationship, with both entities collaborating on climate change initiatives. Playmob has already spent several years working with Sphaira’s PlanetPlay initiative, which explores ways to get the games industry and gamers involved in tackling climate change.

Venture Financing

UK-based PC & Console games developer Steel City Interactive has raised $18.8m (£15m) in a funding round led by Novator, with participation from London Venture Partners and other investors. The funds will fuel the development and release of the company’s debut boxing game, Undisputed.

US-based esports company FaZe Media has secured an $11m investment from Matt Kalish, who will also join the board of directors of the newly established entity of the FaZe Clan organization. The funding will expand licensing and sponsorship opportunities for the FaZe brand, host online events, and launch new merchandise.

US-based web3 platform Param Laboratory has raised $7m in a funding round led by Animoca Brands (ASX:AB1), with participation from Delphi Ventures, Cypher Capital, P2 Ventures, and other investors. The funds will fuel the development of Param’s modular web3 gaming ecosystem. The company recently hired Steve Young, former Activision Blizzard’s consumer products head, as a strategic advisor.

US-based games developer Midsummer Studios has raised $6m in a Seed funding round led by Transcend Fund, with participation from Tirta Ventures, Betaworks Ventures, 1Up Ventures, F4 Fund, Krafton, and other investors. The funds will fuel the development of a new modern life simulation game in The Sims style. The company was founded by ex-Firaxis developers Jake Solomon and Will Miller, who were behind XCOM and Civilization games, among others.

Singapore-based web3 games developer Cross The Ages has raised $3.5m in a Seed funding round led by Animoca Brands. The funds will support the expansion of the company’s web3 card game, Cross The Ages. The company’s total funding is $23.5m.

Nigeria-based web3 platform Gamic has raised $1.8m in a Seed funding round from Polygon Ventures, DWeb3 Capital, Double Peak, Momentum 6, Binance Labs, LD Capital, Mapleblock Capital, Mulana VC, Gate Ventures, and other investors. The funds will fuel the development of the communication platform, which will be an analog of Discord but with web3 elements.

Netherlands-based games distribution platform VaultN has raised $1.6m in a Seed funding round led by PixCapital and Ubit. The funds will support VaultN’s expansion into mobile title distribution. The company was founded in 2021 and launched its platform in May 2023. GOG, Bethesda, Gamesplanet, Fanatical, and other market players used the platform.

Web3 gaming app company Anomaly Games has raised $1.5m in a pre-Seed funding round, with participation from Decasonic, Shima Capital, BreakOrbit, Round13 Capital, and other investors. The platform focuses on games and Telegram users.

Cyprus-based mobile games platform Subscrible has raised $300k in an angel investment round. The funding will fuel the development of an ad-free games catalog platform, which aims to cut user acquisition costs. The company has a partnership with Xsolla. The platform, already available via Google Play, has 15,000 users.

Finland-based games developer BeiZ has secured an undisclosed sum from Gorilla Capital. The funding will support the expansion of the company’s educational apps, Lola Panda, which help kids learn to read, count, and solve problems. The apps have been downloaded over 40 million times and are available in 10 languages.

Singapore-based web3 games developer Baby Shark Universe has secured an undisclosed sum in a seed funding round with participation from Animoca Brands, Credit Scend, Sui Foundation, Comma3 Ventures, Creditcoin, GM Ventures, Neuler, Notch Ventures, X+, and Planetarium Labs. The funding will fuel the development and global marketing of their mobile title, Baby Shark Universe. The company’s valuation was $34m at the end of the round.


US-based venture capital firm Sharp Alpha Advisors has closed $25m Sharp Alpha Fund II. The fund will invest in Early-stage sports, gaming, and entertainment startups, with initial investments ranging from $1-2m. The fund aims to support approximately fifteen companies. The first investment from the fund was with a non-gaming company, C15 Studio, which operates a streaming channel for Formula 1. The company’s first fund raised $10m.