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Saudi Arabia’s PIF Adds to Games Push With 5% Nintendo Stake

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(Bloomberg) -- Saudi Arabia’s Public Investment Fund took a 5.01% stake in Nintendo Co., its third investment in a Japanese games company as the industry consolidates.

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The PIF, as the $500 billion fund is known, said the Nintendo purchase was made for investment purposes, according to a filing to Japan’s Finance Ministry. That is the same reason it has given with previous investments and the holding is set to make the Saudi fund Nintendo’s fifth-largest shareholder, according to data compiled by Bloomberg.

The PIF has been building stakes in video game makers and e-sports firms over the past two years, turning to the Japanese market just as a weaker yen has made investments more affordable. The Saudi fund disclosed stakes of more than 5% in two Japan-listed gaming firms this year: Capcom Co., the maker of the Street Fighter and Resident Evil franchises, and online games provider Nexon Co.

“Saudi Arabia has been beefing up efforts to create its own content industry, and this series of investments in Japanese game companies is likely a way for them to learn from Japan,” said Hideki Yasuda, a senior analyst at Toyo Securities.

A Nintendo spokesman said the company learned about the Saudi investment from news reports and would not comment on individual shareholders.

Japan’s gaming companies have been the subject of speculation amid a broader wave of consolidation in the industry, ever since Microsoft Corp. announced the $69 billion Activision Blizzard Inc. purchase. The PIF had in fact bought about 37.9 million shares in Activision and was losing money on the deal -- until Microsoft stepped in.

Sony Group Corp. is also buying Bungie Inc., the U.S. video game developer behind the popular Destiny and Halo franchises, for $3.6 billion.

Saudi Wealth Fund Reveals Stake in Capcom, Following Nexon (1)

Kyoto-based Nintendo reported lackluster financial results last week as the creator of Super Mario struggles to revitalize its five-year-old Switch console and manage a global chip shortage. The company projected full-year operating income below analysts’ estimates and said it’s expecting to sell 21 million Switch devices this year, shy of the 21.7 million anticipated.

Its shares have climbed about 10% this year.

(Updates with analyst comment in fourth paragraph)

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