$874 Million Invested in 2020 For an Unrealized Gain of $279 Million. Long-Term, Friendly Investments in Well-Managed Global IP.
NEXON Co., Ltd. (Nexon) filed disclosures including investment amounts in four publicly traded companies: Hasbro, Inc., BANDAI NAMCO Holdings Inc., KONAMI HOLDINGS CORPORATION, and SEGA SAMMY HOLDINGS INC. Other investments did not meet the company’s threshold for disclosure.
In 2020, Nexon’s board authorized up to $1.5 billion for investment in entertainment companies that demonstrate the ability to develop and sustain strong globally recognized intellectual property. These are long-term friendly investments with no intention of acquisition or activism. As of the end of 2020, Nexon completed investments totaling ¥92.4 billion ($874 million) which represents 58% of the authorized amount, and recorded an unrealized gain of ¥29.5 billion ($279 million) under other comprehensive income.
“We believe companies with strong, well-managed global IP are often overlooked and undervalued in a market that is narrowly focused on introductions of new IP,” said Owen Mahoney, President, and CEO of Nexon. “These investments reflect our respect for management teams that create and grow global properties over a period of years and decades. We believe that each has the potential to capitalize on the secular shift from linear formats to interactive entertainment.”
Mahoney continued, “These investments represent a good use of our cash in a low-interest environment and we are extremely pleased with the initial results. While leveraging partnerships was not a consideration in our investment decisions, we are pleased with the dialogue that has ensued with some companies.”
Nexon is a global entertainment company with a solid balance sheet, significant cash reserves, strong cash flow, and a proven ability to create and sustain global IP for years – even decades. In 2020, the company generated revenues of ¥293.0 billion and an operating cash flow of ¥137.6 billion and as of December 31, 2020, has ¥525.7 billion in cash on the balance sheet. In November 2020, Nexon announced a three-year share buyback period with a maximum acquisition amount of ¥100.0 billion.