Leyou Technologies Holdings Limited, which was first introduced to us as the Chinese poultry firm to acquire Splash Damage in 2016, is continuing to bolster its presence in the games business by investing $10 million into Austin, Texas-based studio Certain Affinity. The deal yields Leyou a 20% stake in the developer. Certain Affinity, which is Austin's largest independent video game developer, said it will continue to operate independently while expanding operations with new headquarters and new game initiatives.
In addition to the minority stake, Leyou will be providing Certain Affinity with an interest-free, non-recourse loan facility of up to $15 million as part of an agreement to develop and produce an original game "based on certain licensed intellectual properties." Leyou will help to direct the game and will gain a portion of the net revenue it generates. Additionally, the deal stipulates that Leyou does have the option to buy all of the remaining shares of the company in 2021 for a valuation based on an agreed formula, but it cannot exceed $150 million.
While Leyou is not really a known entity in the games industry, it has previously invested in Warframe studio Digital Extremes as well. Leyou describes itself as "a vigorous, ambitious and rapidly expanding developer and publisher of PC/console video games in the global market."
"I have enormous respect for Alex Xu, Leyou's CEO, and the team that he's assembled," said Max Hoberman, Certain Affinity's President and Founder. "This agreement launches a partnership to create an ambitious and exciting new game together, while the additional investment allows us to continue developing our own original IPs. Certain Affinity has a history of co-development on some of the biggest action franchises in the industry, and we will continue this work in parallel. Our commitment to growing the company and expanding our presence in Austin has never been stronger."
Xu added, "With its proven track record producing high-quality video games, Certain Affinity possesses the technical capability and talent to create highly successful titles, which in turn will assist Leyou in further diversifying its video game portfolio and enhancing its revenue streams. This strategic investment into Certain Affinity is consistent with the growth strategy of our Company as we continue to look for opportunities to invest and increase our market share in the video gaming industry."
Leyou's $10 million investment follows and earlier $5 million investment into Certain Affinity by Capstar Partners, a private equity firm in Austin.
Steve Hicks, Executive Chairman of Capstar Partners, is happy to see Leyou backing Certain Affinity as well. He commented, "We're highly selective in who we invest in, as we treat each investment as a true strategic partnership. Certain Affinity has built something special in Austin, and from the moment we met Max, Mojdeh, and the rest of their leadership team we knew that we wanted to be a part of it. We're excited to welcome Leyou as a strategic partner, as they will provide crucial expertise and support as Certain Affinity makes lead development and original IP a higher proportion of their portfolio."