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Sony pumps another $200m into Fortnite maker Epic Games

Sony Group Corporation, parent of Sony Music Group, has invested another $200 million into Epic Games, the US company behind Fortnite.

Tokyo-based Sony’s investment arrives within a new $1 billion funding round for Epic, confirmed yesterday (April 13), which the latter firm says will “support future growth opportunities”.

As a result of the new funding, Epic Games says it has achieved an equity valuation of $28.7 billion. Thus, Sony’s $200 million equity investment will have netted the Japanese company around 0.7% of the Fortnite maker.

This is the second time Sony has invested in Epic Games. In July 2020, Sony announced it had made its debut investment in Epic, pumping $250 million into the games company.

A month later, Epic revealed that Sony’s investment had formed part of a total $1.78 billion round, that gave Epic a $17.3 billion valuation.

This tells us two important things:

  • Sony’s initial investment ($250 million at a $17.3 billion valuation) would have seen it acquire around 1.45% of Epic Games. Combined with the new investment, it follows that Sony now likely owns somewhere between 2% and 2.5% of the interactive entertainment company.
  • In the past seven months, Epic’s equity valuation has risen by a whopping $10.4 billion (from $17.3 billion to $28.7 billion). Sony’s initial $250 million investment in the Fortnite company is therefore already worth approximately $416 million.

Sony has good reason to smile about its investment in North Carolina-headquartered Epic, then – but not quite as much as Tencent Holdings.

The Chinese giant invested $330 million in Epic in 2012, some five years before Fortnite was released.

That investment netted Tencent a 40% stake in Epic, an equity slice that – thanks to Epic’s latest funding round – is now worth ≈$11.5 billion.

Epic Games CEO and founder, Tim Sweeney, remains the controlling shareholder of the company: in a note issued today (April 14) Exane BNP Paribas suggests that Sweeney retains around 45% ownership of Epic Games, with Tencent retaining around 40%.

Announcing the new funding round, Epic said that Sony’s $200m contribution “builds on the already close relationship between [our] two companies and reinforces [our] shared mission to advance the state of the art in technology, entertainment, and socially-connected online services”.

“We are excited to strengthen our collaboration to bring new entertainment experiences to people around the world. I strongly believe that this aligns with our purpose to fill the world with emotion, through the power of creativity and technology.”

Kenichiro Yoshida, Sony Group Corporation

Said Epic’s Sweeney: “We are grateful to our new and existing investors who support our vision for Epic and the Metaverse. Their investment will help accelerate our work around building connected social experiences in Fortnite, Rocket League and Fall Guys, while empowering game developers and creators with Unreal Engine, Epic Online Services and the Epic Games Store.”

Kenichiro Yoshida, Chairman, President and CEO, Sony Group Corporation, said: “Epic continues to deliver revolutionary experiences through their array of cutting edge technologies that support creators in gaming and across the digital entertainment industry.

“We are excited to strengthen our collaboration to bring new entertainment experiences to people around the world. I strongly believe that this aligns with our purpose to fill the world with emotion, through the power of creativity and technology.”

Artists to have played virtual concerts in the Fortnite Metaverse include Travis Scott, Marshmello, Diplo, Steve Aoki, and Deadmau5.

In addition to Sony, other investors in the new $1 billion funding round in Epic Games include Appaloosa, Baillie Gifford, Fidelity Management & Research Company LLC, and GIC.

The round also includes funds and accounts advised by T. Rowe Price Associates, Ontario Teachers’ Pension Plan Board, and funds and accounts managed by BlackRock, Park West, KKR, AllianceBernstein, Altimeter, Franklin Templeton and Luxor Capital.

Credit Suisse and BoFA Securities acted as joint placement agents to Epic, and Wilson Sonsini Goodrich & Rosati provided legal counsel to Epic.Music Business Worldwide

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