Embracer CEO defends taking $1B from Saudi Arabia

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Embracer Group announced last week that the kingdom of Saudi Arabia, through its Savvy Gaming Group, had made a $1 billion investment (opens in new tab) in the company, granting it an 8.1% stake in Embracer Group. It was the most recent in a series of big moves into the industry made by Saudi Arabia through SGG and the Electronic Gaming Development Company, which have been controversial because of the nation’s notorious repression of human rights and, more specifically and recently, the implication of its de facto ruler in the murder and dismemberment of a journalist.

In a subsequent message (opens in new tab), Embracer CEO Lars Wingefors defended the move, saying that he understands people have “different views on this topic.” The decision to accept the investment was not taken lightly, he said, and will not change how the company is run.

“I want to be clear that Embracer will continue to be operated by me, our operative CEOs and management teams across the entire Group,” Wingefors wrote. “Embracer is built on the principles of freedom, inclusion, humanity and openness. The transaction with SGG will not change this in any way. Embracer is still controlled by the people working in our Group. Together, we control a significant majority of the votes in the company.

“SGG will own slightly more than 5 percent of the votes and 8 percent of the capital and they have invested in Embracer because they support our current vision, strategy, and leadership, not to change it.”

As for why exactly Embracer would accept investment from what Wingefors gently described as a “non-democratic country,” the answer seems to come down to the simplest and most obviously predictable answer: Money is money. The company already has multiple investors from the Middle East, Africa, and Asia, and SGG’s parent company, Saudi Arabia’s Public Investment Fund, already holds stakes in other gaming companies including Capcom, Nexon, Nintendo, and ESL. And while Wingefors says Embracer is “a value-based company,” it’s also a machine that needs to be fuelled: It’s grown from seven employees a decade ago to more than 12,500 around the world now, and there’s apparently still much to be done.

“For Embracer, there is only a handful of players in the world providing this type of sizable long-term equity capital,” Wingefors wrote. “Without capital, our journey would notably slow down going forward which could also have many other implications for our businesses. SGG is providing very long-term capital to support our strategy without Embracer having to give up our way of operating or other commercial opportunities.”

Wingefors said Embracer and SGG have spent the last six months “learning about each other and sharing thoughts on how we can work together,” and have “learned and discussed difficult topics involving non-gaming issues relating to Saudi Arabia.” He also committed to policies of equality, diversity, and “zero-tolerance against all forms of harassment and discrimination,” and said that any company it establishes in Saudi Arabia or the MENA region will operate by the same rules.

That’s admirable, but largely an empty promise. The company may guarantee equal rights, but Saudi Arabia itself does not: Women only recently earned the right to drive (opens in new tab) and live on their own (opens in new tab) without permission from a male guardian, while same-sex relationships are outlawed and subject to strict punishment. According to US intelligence agencies, the country’s crown prince Mohammed bin Salman also demonstrated a complete disregard for law and basic human decency in 2018 when he approved the brutal murder of Saudi journalist and regime critic Jamal Khashoggi (opens in new tab). Bin Salman is also the chairman of Saudi Arabia’s Public Investment Fund, which fully owns Savvy Gaming Group.

Thanks, Axios (opens in new tab).

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