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Reliance in deal for 50% of Codemasters

Codemasters, the UK’s largest computer games publisher, said on Monday that India’s Reliance Big Entertainment had taken a 50 per cent stake in the company, buying out Goldman Sachs.
 
Reliance Big owns Zapak Digital Entertainment, India’s largest gaming company, and the deal will allow it to bring Codemasters games franchises, such as its popular Ashes Cricket games, to the cricket-mad Indian market.
 
Privately listed Codemasters did not reveal how much Reliance Big had paid for the stake. However, two years ago, the Leamington Spa-based company mooted a stock market flotation at a valuation of about £200m. Balderton Capital, the venture capital firm that remains an investor in the company, and Goldman Sachs are thought to have collectively invested about £100m in the company over the past few years.
 
Codemasters had annual revenue in excess of $150m (£98m) last year, but needs additional investment to stop it from falling behind in the development of internet-based computer games, the fastest-growing part of the market.
 
“Traditional console games are still the bulk of our revenues but the future is online games. Now we are going to invest heavily in the area,” said Rod Cousens, chief executive of Codemasters.
 
Codemasters’ main involvement in online games is acting as European publisher for Lord of the Rings Online, a multi-player game developed by Turbine of the US.
 
Mr Cousens said that without new investment, Codemasters would struggle to grow. Sales fell in 2009 and he approached several investors in the UK and western Europe, but failed to raise funding.
 
Details have yet to be finalised, but Reliance Big is expected to fund the roll-out of several online games over the next two years, which could lead to the expansion of Codemaster’s UK development studios. It employs about 500 people and there are no plans to shift production of games to India.
 
Relianc Big’s investment comes after the UK government recently announced plans to support the domestic games industry by offering tax credits similar to those given to the film industry. The aim is to prevent a “brain drain” of UK computer games development talent overseas.
 
A large number of UK games companies have been bought by foreign rivals in recent years, including the £84m purchase of Eidos, makers of the Lara Croft: Tomb Raider series, by Square Enix of Japan and the £275m acquisition of Playfish, the online games company, by Electronic Arts of the US.
 
“I regard this as a huge opportunity for a UK company. It propels Codemasters up into a new league, and allows us to compete in new areas. It will allow us access to the emerging markets through India,” Mr Cousens said. “Instead of watching more news of shut-downs in British Industry, we are now not facing that.”
 
http://www.ft.com/cms/s/0/1b369712-40e8-11df-94c2-00144feabdc0.html