CDIB sees 3x return on game developer deal

Last week the firm realized a 3.1x money multiple and a 39% IRR through a public market sell-down of most of its minority stake in Korean online game developer WeMade Entertainment.

"We invested in Wemade because the global online game market was expected to rapidly grow at 18% per year, and the company's diversified game portfolio and track record also explain why we chose WeMade," says Lionel de Saint-Exupery, Wpresident and CEO of CDIB Capital, the overseas investment arm of China Development Financial Holding Corp.

Founded in 2000, WeMade has been profitable since its inception and is well-known for The Legend of Mir 2, which has more than 350,000 active concurrent users and 200 million registered users globally. When CDIB invested in June 2008, putting in KRW15 billion ($14.5 million), there was no need to modify WeMade's business development plan - its diversified portfolio and track record were already attractive.

Rather, CDIB and its investment partner, Korean tech-focused PE firm Sky Lake, provided strategic and financial advice. As board members, the two firms worked closely with management to build up WeMade's scale ahead of an IPO. The company listed on KOSDAQ in 2009, raising KRW 130 billion.

During CDIB's investment period, WeMade's revenue and EBITDA grew by over 104% and 71%, respectively. A significant portion of this expansion came via expanding the company's footprint outside Korea with acquisitions in China and Japan. WeMade has also reportedly teamed up with Chinese tech giant Tencent to invest KRW25 billion in Kakoo Talk, a Korean mobile messaging application, buying 5.8% of the company.

Following the partial exit, CDIB's remaining interest in WeMade is very small and the firm has given up its board seat. "We started to gradually take money off the table when we achieved a 3x of your money to de-risk our investment," the CEO tells AVCJ. "However, there is no pressure for us to exit our entire stake as company's prospect is still attractive and the stock is currently at all time high."

WeMade is one of the 14 firms in CDIB's existing portfolio - financed from parent company's balance sheet - which has generated a money multiple in excess of 2x and a 26% IRR since its inception in 2006. CDIB's four partners and 20 investment professionals are now working on its maiden middle-market pan-Asia PE fund, which is scheduled to launch in the second half of the year.
"Our fund will have a target of $300 million, focusing on growth capital investments with an average ticket size of $20-$30 million across consumer, TMT, financial services and industrials space," de Saint-Exupery adds.

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• Topics
• Exits
• Greater China
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• CDIB Capital