South Korean game developer Pearl Abyss’ share price is likely to rise with Singapore sovereign wealth fund GIC, formally known as Government of Singapore Investment Corporation, investing in the company.
GIC currently owns 5.06 percent, or 661,672 shares in Pearl Abyss via GIC Private Limited, according to industry sources on April 9. Given the game developer’s market capitalization of around 2.58 trillion won, GIC Private Limited has 130 billion won worth of Pearl Abyss shares.
GIC Private Limited has continuously bought shares of Pearl Abyss since 2018. It reportedly purchased shares at 170,000 won level at the end of March. GIC Private Limited didn’t own any stake in the game developer at a time when the company made its stock market debut in 2017.
This case that GIC makes an investment in a relatively less-known Kosdaq-listed game developer is quite rare as the sovereign wealth fund has invested mainly in blue-chip companies. The fund has made the latest move in search of higher returns.
GIC’s investment is based on Pearl Abyss’ solid earnings performance and stable stock price. The company recorded an operating profit of 52.3 billion won as of the end of 2017, which increased to 150 billion won and 160 billion won level for two years after that. The company is likely to generate an operating profit of 40 billion won in the first quarter of 2020.
What is notable is Pearl Abyss’ stock price movement. Shares in Pearl Abyss began trading at 103,000 won a share and were once on the verge of reaching 300,000 won level. After hitting a peak, shares have hovered around 200,000 won level. The share price was in mid-190,000 won range on April 8.
There are few firms in the games industry that show such a stable stock price movement. Practically none of domestic game companies have doubled their valuation compared to their initial public offering (IPO) price over the past ten years.
The fact that GIC has invested in Pearly Abyss is serving as a tailwind to the share price. Since the sovereign wealth fund has bought shares at 170,000 won level on the last day of March, Pearly Abyss’ stock price has risen continuously and exceeded 190,000 won level, up more than 10 percent.
“It seems that GIC also believes Pearl Abyss to show robust earnings and stable share price movement,” said a market watcher, added that the sovereign wealth fund reportedly generated a return of over 10 percent in just two days after its investment.
(By reporter Kim Si-mok)