China's Tencent Holdings is reportedly "leading a deal" to acquire as much as 10% of Bluehole Inc., creator of "one of the world’s hottest PC games," from existing shareholders for more than $500M, according to Ma, Roof & Chae of the WALL STREET JOURNAL. The transaction, which "likely will include other investors," could value South Korean-based Bluehole at more than $5B, sources said. Bluehole was last valued "as high as" $3.7B by private investors. A number of U.S.-based venture-capital firms may also participate in the deal, "particularly those interested in esports," one source said. Although "mainly a so-called secondary sale," the transaction may involve issuing some new shares, sources added. Tencent’s potential investment "would give it another foothold in the emerging genre" of "battle royale" videogames, which "exploded" in popularity last year. However, it would place Tencent on both ends of a legal battle between Bluehole and Epic Games Inc., which makes competing title Fortnite. Tencent bought 48% of North Carolina-based Epic, which developed Fortnite, for $330M in '12. Research firm Niko Partners Managing Partner Lisa Hanson said, "Tencent goes into these deals hoping for the best but must recognize investing in two similar titles could result in complicated matters." Sources said that Bluehole is "well capitalized" and does not need to raise money. Instead, the sale is "meant to give early investors a chance to cash out some of their shares" (WSJ, 6/13).
