Tencent Holdings acquired a nine percent stake in Frontier Developments, a game studio best-known for its Elite Dangerous and RollerCoaster franchises, the Cambridge, United Kingdom-based company announced on Friday. The Chinese investment firm paid £17.7 million for its share of the studio, which translates to $23.25 million by today's exchange rates, thus expanding its global footprint and gaining a significant asset in the UK. The sum ensured Tencent's ownership of all 3,386,252 ordinary stocks that Frontier Developments issued earlier this month, with the media company acquiring them at a price of 523.2 pence per share. The Shenzhen, China-based conglomerate is now the second largest shareholder of the British studio and is right behind Frontier Developments Founder and Chief Executive Officer David Braben.
The development unsurprisingly saw Frontier's shares reach new heights, rising by 10.3 percentage points on Friday. The studio posted £21.4 million ($28.1 million) in revenue in 2016, with Tencent's investment representing a significant financial boost for the company whose finances are already seen as healthy. The British company filed for its new shares to be listed on the Alternative Investment Market (AIM) and expects the London Stock Exchange to approve the request in early August. The investment itself is meant to signify a new era for the studio that's now setting its sights on China, according to Braben's recent comments, with Frontier CEO describing the Far Eastern country as one the firm's new key markets. Tencent Chief Strategy Officer James Mitchell mostly reiterated that notion while commenting on the company's latest investment, stating how the media giant believes that theme park management, space exploration, and similar game genres in which Frontier specializes in will see rapid growth in China in the future.
The move may also spell a larger change in Frontier's business strategy and result in more than just a simple territorial expansion; while the game developer largely made a name for itself with PC games, Tencent has mostly been investing in mobile gaming in recent years and may prompt the studio to transition its efforts to smartphones and tablets in the future. Some of Tencent's mobile offerings in China are currently so popular that the firm was even forced to limit children's ability to play them and the company is expected to commit significant resources to iterating on its past successes going forward.