Zennon, New World invest $25m in China games developer CMGE
Zennon Capital Partners and New World Strategic Investment (NWSI) have invested $25 million in NASDAQ-listed China Mobile Games and Entertainment Group (CMGE).
According to a regulatory filing, CMGE will sell 2.5 million American Depository Shares (ADS) at $10 apiece to Zennon subsidiary Champion Plus Group and Grand Synergy, an affiliate of NWSI. CMGE shares closed at $13.55 on the day.
Champion will also receive warrants to purchase up to 100,000 ADS that are valid for two years and exercisable at any time commencing six months after the closing date.
Mobile game developer CMGE claims to have the largest market share in China in terms of revenues in 2010, 2011 and 2012. It has a portfolio of 510 games and integrated capabilities in development, operation, sale and distribution for both Android and iOS-based platforms.
It also offers handset operating system software and hardware design with one-year post-contract customer support service. Its mobile handset design business pre-installs CMGE's mobile games and game platforms in the handsets it designs.
According to the company's unaudited financial results for the quarter ended March 2013, revenues were down to RMB36.5 million ($5.9 million), compared with RMB54.3 million in the first quarter of 2012 and RMB28.9 million in the fourth quarter of 2012.
Mobile phone game revenues came to RMB29.0 million for the quarter, down 43.7% year-on-year, but up 40% on the prior quarter.
The company will use the proceeds for product development, marketing and expanding sale and distribution channels. It will launch over 15 social games in 2013, and has invested in developing smart phone social games and establishing third-party game publishing capabilities. Since November 2012, it has acquired eight game development teams.
CMGE has also expanded distribution channels through partnership agreements with China Wireless Technologies and Beijing Tianyu Communication Equipment to pre-install its game center application on over 10 million smartphones.
PVG Venture Capital and Taiwan semiconductor company MediaTek purchased a stake in the company last year.
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