Tencent's $330M Epic Games investment absorbed 40 percent of developer [Updated]

Massive Chinese internet company Tencent snatched up 48.4 percent of Epic Games' available capital shares for $330 million last summer, giving the company the right to nominate directors to the North Carolina-based studio's board , according to Tencent's financial reports.

The acquisition amounted to Tencent purchasing 40 percent of Epic Games, and led to Tencent appointing two representatives to the Epic board of directors, Epic Games founder Tim Sweeney told Polygon.

"In June 2012, Tencent made a minority investment in Epic Games, purchasing approximately 48.4 percent of outstanding shares of Epic stock, equating to 40 percent of total Epic capital inclusive of both stock and employee stock options," Sweeney said in an emailed statement. "As part of the investment, two Tencent representatives joined Epic's board of directors, in addition to the three directors and two observers appointed by Epic. We're thrilled to have a world-leading partner in Tencent, who gives Epic unique access to the Chinese market as we head into the next chapter of our 21-year history as a leading independent developer."

The deal, first announced last June, was discussed in a bit more detail this week (and spotted by reader Fan Zhang who tipped us off), in Tencent's 2012 fourth quarter and annual results report.

The investment in Epic Games came shortly after Tencent reorganized its business into six new groups and a subsidiary focused on e-Commerce, according to the report. It was one of several investments Tencent made in companies "whose products or serves are complementary to our own."

Among the game-related investments was Riot Games. The report notes that the growing popularity of League of Legends helped strengthen their game portfolio in China and increased their revenue internationally.

The Epic deal was announced in June, 2012 as a strategic investment by the Chinese company, but neither the percentage of stock purchased, or the amount it cost were known at the time. At the time Epic Games vice president Mark Rein told Polygon that Tencent's business is "highly complementary to ours."

The deal was finalized in July, according to this week's report, with the group acquiring "48.4 percent of its then issued share capital," for $330 million.

"Since the Group has the right to nominate directors to the board of Epic Games, Epic Games is accounted for as an associate of the Group," according to the report.

In the months following the acquisition of stock for $330 million, a number of high profile people left Epic Games. The month after the acquisition was finalized, Gears of War producer Rod Fergusson left Epic Games to work on Irrational Games' Bioshock Infinite and three leads at Bulletstorm developer People Can Fly, which was acquired by Epic in 2007, left. In October, Cliff Bleszinski left the studio after two decades with the company. In December, the president of Epic Games, Mike Capps, announced that he was retiring from his role at the company and "transitioning into an advisory role as well as remaining on the Epic board of directors." Earlier this month, Capps gave up that connection with the company too, saying he is no longer affiliated with Epic.

Update: The story was updated to include a comment from Epic Games founder Tim Sweeney.

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