Global asset management firm Schroders has acquired a stake of almost 20 per cent in Eidos, a move which is being interpreted as a vote of confidence in the UK-based publisher by market watchers.
The 19.1 per cent stake owned by the investment group is spread across a number of different managed funds, and represents the single largest holding in Eidos - almost ten times the holding of creative director Ian Livingstone.
Although the purchase of a percentage stake this large by an individual investment company is extremely unusual, analysts we spoke to played down the possibility of a takeover - pointing out that Schroders' stake is held by several independently managed funds, and that the company would have had to declare its intentions if it were buying on behalf of a third party.
Instead it seems that Schroders' Â£35 million stake in Eidos is simply a reflection of the company's confidence in the publisher, and in the games industry. "If you buy the argument that videogames are an important medium for the future, then at the right price this would be a good investment for the long term," commented Nicholas Lovell of games industry finance specialists Lovell Consultancy.
"If they have made an investment of this size, they must think it is a good industry to be in, and if you adopt that view, then within the UK Eidos is one of the best ways to be involved in the games sector," he continued. "Its strong franchises offer some measure of downside protection even if things go wrong. It's the easiest way to play the games industry from a UK investor perspective, and it's a relatively safe buy - albeit safe within the context of the games industry, which is historically very volatile."
It's worth noting that the bulk of Schroders' investment in Eidos came around the time of the publisher's well-publicised "City Day" at the end of November, suggesting that Eidos' overtures to the financial powerhouses were as successful as the company might have hoped. Surprisingly, however, the heavy investment in the company by Schroders has had minimal effect on the stock price, which is currently trading at the lower end of its recent range.
External Link: [Lovell Consultancy]