iCafe8 Takes 22% Stake in China Telecom's Dazzle Interactive
National Business Daily, 6/03/14
Hangzhou-based Internet cafe platform operator Hangzhou Shunwang Technology (iCafe8) (300113.SZ) has entered into a framework investment agreement with the China Culture Industry Investment Fund, China Telecom (NYSE: CHA; 0728.HK), and China Telecom's Nanjing-based game platform operator Dazzle Interactive, by which iCafe8 will acquire a 22% stake in Dazzle Interactive for RMB 220 mln. Under the agreement, China Culture Industry Investment Fund will acquire an 8% stake in Dazzle for RMB 80 mln, valuing the company at RMB 1 bln upon completion of the transaction.
The current round of investment will be primarily used to replenish Dazzle Interactive's operating capital, as well as to fund marketing, R&D, and M&A activities. iCafe8 also reserves the right to nominate two members to the board of directors at Dazzle Interactive. China Telecom has guaranteed that its gaming business and the gaming businesses of its subsidiaries will continue to be exclusively operated by Dazzle Interactive under the agreement.
Dazzle Interactive was established by China Telecom in September 2012 as its sole online game developer, operator, and publishing platform, with registered capital of RMB 200 mln. Dazzle Interactive operates online gaming platforms Chinagames and e-Game. e-Game boasts a user base of over 100 mln, with monthly active users exceeding 30 mln and more than 500 mln cumulative downloads of approximately 5,000 game titles on the platform.
As of the end of 2013, Dazzle Interactive had total assets of RMB 275 mln, with net assets totaling RMB 166 mln. The company recorded a net loss of RMB 10.71 mln for 2013, but posted a net profit of 9.46 mln through the first four months of 2014.
Editor's Note: For more information on this topic, please see "China Telecom's Dazzle Interactive Seeks Funding," MD 1/03/14 issue.
Keywords: mobile gaming online gaming China Telecom Internet loss profit users active users Internet cafe M&A 0728.HK CHA iCafe8 300113.SZ Shunwang Dazzle Interactive MAU
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