Supercell and GungHo
Supercell is selling 51% of their shares for $1.53 billion to Japan’s SoftBank and GungHo OnLine Entertainment. This investment, makes Supercell a subsidiary of Softbank, and allows Supercell’s global expansion. It effectively represents a quadrupled valuation for 100-employee Supercell to over $3 billion in the last seven months.
GungHo and Supercell had a pre-existing relationship announced earlier this year for in-game collaboration. Softbank has been a major investor not just in mobile carrier networks, but also in services for those networks. It’s a major player both in Japan as well as in the U.S. with Sprint. In this deal, GungHo is investing 20% of the amount, and SoftBank the remaining 80%.
SoftBank notes that it and GungHo will jointly establish a special purpose company in Finland. SPC will hold 51% of shares in Supercell’s voting stock on a fully-diluted basis for a total $1.53 billion.” Supercell will become a subsidiary of SoftBank, and will continue to operate independently as usual. Co-founder Ilkka Paananen will remain CEO and operations will stay the same.
Putting it into Context
Supercell so far has chosen to take a different route, backing away from turning to the public markets, with all their scrutiny, and instead giving employees and shareholders liquidity through secondary sales and going to VCs for further investments. That seems to be the motivation with taking this investment, too:
“This new partnership will accelerate Supercell towards our goal of being the first truly global games company, and gives us enough time to get there,” Paananen writes in the post below. (Emphasis mine.)
In this case, with SoftBank’s and GungHo’s investments come more secondary share sales. “As many of you know, a big part of Supercell’s culture is the idea of ‘we are all in this together.’” Paananen writes. “In line with this thinking, everyone at the company will participate in the upside and receive a portion of the proceeds from the investment. None of us work here just for of money, but when the company succeeds, everyone should get their fair share of it and this transaction is no exception.”
The Path to #1 Mobile Company
Masa, who Paananen describes the most long-term thinkers he has ever met, explains the rationale for SoftBank in Supercell’s blog post:
“In [SoftBank’s] quest to become the #1 mobile Internet company, we scour the globe in search of interesting opportunities and right now some of the most exciting companies and innovations are coming out of Finland. Supercell is one of those rare and special companies. While your success is impressive, it is your amazing culture and deep passion that truly inspired me. After getting to know Ilkka and some of the team, it became clear to me that you, like us at Softbank, are on a similar long and aspirational journey to shape the future of entertainment for the next hundred years. And, I’m excited to see an independent Supercell continue to rise with great people and great games, delivering happiness to so many people around the world.”
Life after Nokia
This is also a significant growth story for Finnish Supercell. The company’s management is still split between San Francisco and Helsinki. All development and operations are still in its home country and intends to remain that way. “I think more and more people in this country are realizing that there is life after Nokia!” Paananen writes.