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Korean game makers shun IBs for M&A deals

Krafton-Unknown Worlds, Netmarble-SpinX Games, Kakao Games-Lionheart deals concluded without IBs

By Nov 16, 2021 (Gmt+09:00)

PUBG: New State published by Krafton
PUBG: New State published by Krafton

“We know which companies to buy after playing the games a few times.”

More and more South Korean game developers are pursuing mergers and acquisitions (M&As) worth billions of dollars without hiring investment banks. Major global producers in the country do not need IBs to find “proper” companies for acquisitions since they are so often invited to the negotiating table while banks, who are not specialized in new industries, are not.

Domestic game makers are emerging as big players in the capital markets, while IBs are increasingly being left on the sidelines.


Last month, Krafton Inc. decided to buy US game studio Unknown Worlds Entertainment Inc. for $750 million, in its first acquisition since its initial public offering (IPO) in August, according to a filing with South Korea’s financial regulator. The South Korean developer of PlayerUnknown’s Battlegrounds (PUBG) did not hire an IB for the acquisition but its strategic team of about 20 staff managed the deal, IB industry sources said on Nov. 15.

Damian Lee, who joined Krafton as head of investments in July, led the takeover of the developer of Subnautica. Lee started his career in the financial markets at CPP Investments, Canada Pension Plan’s investment arm, in 2007 and worked for bond giant PIMCO for three years from 2013. He was a partner at venture capital firm Archstone Investments before joining Krafton. The game developer has been focusing on acquisitions by placing the strategic team under the immediate control of CEO Kim Chang-han.
(Courtesy of Unknown Worlds Entertainment)
(Courtesy of Unknown Worlds Entertainment)

Another South Korean game publisher Netmarble Corp. hired not IBs but law firms and accounting firms when it purchased the world’s No. 3 social casino game producer SpinX Games for 2.5 trillion won in August.

Netmarble’s M&A team with about five staff, led by a managing director Do Ki-wook, managed the $2.1 billion deal. Do had been working for CJ ENM Co.’s game unit, the predecessor of Netmarble but has no experience in the IB industry.

“The company is as good at M&A deals as other companies with only its own manpower even without reinforced external financial personnel,” said an industry source who worked with the team.

Kakao Games Corp. took over Lionheart Studio Corp., the firm behind South Korea’s top mobile game Odin, for 450 billion won earlier this month without the assistance of an IB.


The game industry does not need IBs as advisers for acquisitions since their own employees are better at seeking out takeover targets, corporate value assessment and sector analysis, sources said.

Some game studios have approached major players in South Korea to make sales. For example, the sellers of Unknown Worlds Entertainment contacted a few global developers, including Krafton. South Korea’s large studios became regulars in the sector's global M&A market, industry sources said.

“People who are in alliances or have acquaintances make proposals in most cases,” said a game industry source. “We don't really have reasons to hire IBs.”

The local game industry M&A market is expected to increase further since South Korea’s major publishers are looking for more deals.

NCSoft Corp. recently pledged to pursue acquisitions on mounting criticism among shareholders over weak growth and the sluggish performance of new games. The gaming giant has been inactive in M&As of late, with its last deal the purchase of Electronic Arts (EA) in 2015.
Lineage W developed by NCSoft
Lineage W developed by NCSoft

Nexon Co. scouted Alex Iosilevich, a veteran media investment banking specialist, as global president and chief investment officer to lead the group’s M&A business. Iosilevich previously worked for major IBs such as UBS and Deutsche Bank.

South Korea’s game developers are looking for not only industry peers but also other sectors such as non-fungible tokens (NFTs) and cryptocurrencies, adding to concerns among IBs.

“To make matters worse, game producers are paying more attention to sectors that existing financial companies cannot cover,” said an IB industry source. “I am worried that more and more people will think IBs are useless.”

Write to Jun-ho Cha at

Jongwoo Cheon edited this article.

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