Chinese firm's deal to buy Kiwi video game firm worth more than $100m

Hong Kong-listed Tencent Mobility was granted Overseas Investment Office approval to buy up to 100 per cent of Kiwi video game developer Grinding Gear Games for more than $100 million.

Tencent Mobility - an online communication, advertising, and gaming service provider - was granted consent to acquire up to 100 per cent of the shares in Grinding Gear Games, 80 per cent up front and the remaining 20 per cent over approximately six years, a summary of the decision released today said.

While no amount was disclosed, the need for OIO approval was triggered because it exceeds $100m.

"Tencent Mobility Ltd has satisfied the OIO that the individuals who will control the investment have the relevant business experience and acumen and are of good character," the OIO said.

"Tencent Mobility Ltd has also demonstrated financial commitment to the investment."

According to the OIO, the shareholders of Grinding Gear Games "wish to realise the value of their investment and to allow the company to grow, by utilising the international connections of Tencent Mobility".

Auckland-based Grinding Gear Games was founded in a New Lynn garage and is best known for creating the Path of Exile online video game that has around 2 million players signed up.

Grinding Gear Games managing director Chris Wilson this month said the deal meant the company could expand and hire more people for its Auckland-based studio.

"We're looking to increase our headcount over the next year from 114 full time employees to around 130," Wilson said. "We're planning to do more expansions for our games, in parallel, and of course bolstering the team will be really useful in achieving that."

Auckland-based Grinding Gear Games is best known for creating the Path of Exile online video game.

Wilson said the deal came about after Tencent last year published its game Path of Exile in China.

"They proposed the deal after they decided they liked us," he said. "There have been many people interested for a number of years but finding someone we knew would be a good fit for us and would let us get on with our own stuff independently was important because we often talk to people who have various plans for our company."

Tencent Mobility is majority owned by Hong-Kong investors and is the world's largest online games company. Its total revenue in the first quarter of 2018 was US$11.7 billion ($16.8b).