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November 19, 2009

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Singapore GIC buys Shanda Games stake

SINGAPORE'S biggest sovereign wealth fund, GIC, has bought a 5.4 percent stake in China's Shanda Games, its second recent investment in a newly listed firm in the United States.

The move comes after GIC, as the Government of Singapore Investment Corp is known, said in late September that it was looking for opportunities after it decided to move into riskier investments in early 2009. The fund had reduced exposure to listed stocks by 10 percent between July 2007 and September 2008.

GIC bought 4.4 million United States shares of Shanda Games, currently valued at about US$47 million, according to a regulatory filing a few weeks after Shanda completed a US$1-billion initial public offering.

The investment shows how large investors are piling into China's gaming frenzy. In September, Shanda's IPO was the first US$1-billion American IPO for 17 months.

"The game market has very strong growth driven by increasing Internet penetration and consumer growth in China," said Dick Wei, a Hong Kong-based analyst at JPMorgan.

"For the past two years the market grew more than 50 percent year on year. That high growth rate is unsustainable, but I think maybe the 25-30 percent growth rate should be sustainable over the next few years," Wei said.

GIC last week said it bought a 6.9 percent stake in Hyatt Hotels Corp, which raised US$950 million in an IPO.



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