Saudi Crown Prince Mohammed bin Salman speaks during the Gulf Summit in Riyadh, Saudi Arabia, Dec. 14, 2021. Reuters-Yonhap

By Baek Byung-yeul

A 3 trillion won ($2.4 billion) investment into two Korean game companies by the Saudi Arabian government-led Public Investment Fund (PIF) has caught the attention of investors, according to industry officials Tuesday.

The officials said PIF is betting on the growth potential of the Korean game industry with its aggressive investment into NCSOFT and Nexon.

"As far as I know, this fund is a long-term investor in major companies and high-growth companies in each country's industrial sector. In the global market, Korean game companies such as Nexon and NCSOFT and cultural content companies seem highly likely to grow," an official from a local game company said on condition of anonymity.

PIF, which is known to operate a fund worth around $500 billion, acquired a 5.02 percent stake in Nexon, which is listed on the Japanese stock market, for around 1 trillion won at the end of January. With the acquisition, PIF's total stake in Nexon is now at 7.09 percent, making it the fourth-largest shareholder.

NCSOFT also reported to the financial regulator on March 10 that the Saudi wealth fund invested around 1 trillion won in the company to expand its stake from 6.69 percent to 9.26 percent. The acquisition made the Saudi fund the second-largest shareholder of NCSOFT, following the game company's CEO and founder Kim Taek-jin who holds 11.9 percent. PIF referred to the stock purchase as a "simple investment."

A Nexon spokesman said PIF had not consulted the company in advance before purchasing its shares, adding that it is only speculated that the fund made the investment based on the growth potential of Nexon. An NCSOFT spokesman also said PIF's purchase of NCSOFT shares has only been disclosed to the Financial Supervisory Service and didn't know the reasoning behind it.

"There was no pre-coordination with us before PIF bought the stake in our company, so it is difficult to accurately grasp the intention behind the investment," the Nexon spokesman said. "It can be assumed that the investment may have been based on the investment value of the company. We can only assume that the investment was made based on games we are currently servicing and our future games."

Given that PIF, chaired by Saudi Arabia's Crown Prince Mohammed bin Salman, seeks to diversify the Middle Eastern country's economic structure that currently relies heavily on the oil industry, another game industry official speculated that PIF's investment in the Korean game companies shows its goal of securing stakes in future industries.

"PIF has stakes in prominent game companies such as Activision Blizzard, EA and Capcom. The exact intention is difficult to know, but as Microsoft's acquisition of Blizzard shows, the game industry is recognized as one of the most promising future industries. Its investment in Korean firms could be part of that," the anonymous official said.