HONG KONG—In his charm offensive to win China's biggest overseas
technology acquisition, Martin Lau swapped his sophisticated banker
persona for that of geeky gamer by playing up his obsession with
Supercell Oy's mobile game "Clash Royale."
Mr. Lau, president of Chinese internet giant Tencent Holdings
Ltd. "had just dropped out from the 'Clash Royale' global top-100
players, and it was almost impossible to get his focus back to the
topics we had to discuss," Supercell co-founder Ilkka Paananen
wrote on his blog after the deal was announced last month.
Tencent's $8.6 billion deal to buy the Finnish games maker from
Japan's SoftBank Group Corp. and other shareholders shines a
spotlight on Mr. Lau, a low-key but polished former Goldman Sachs
banker. The 43-year-old executive is central to the Chinese
company's ambitions to grow outside China—where it leads in
videogames and runs the biggest messaging platforms—into a global
company.
Mr. Lau's obsession with "Clash Royale"—colleagues say he plays
it and other Supercell games in the office—and his assurance that
Supercell's management would stay in charge after the takeover
helped win the deal.
For Mr. Lau, the Supercell buy is the latest in a string of bold
bets, starting with his decision more than a decade ago to leave
Goldman Sachs to join Tencent, which was then an upstart internet
company valued at $1.3 billion. He has since led Tencent's growth
through deals to buy into China's biggest startups and major U.S.
videogame companies.
Investors recently valued Tencent at about $224 billion, more
than Intel Corp., at $165 billion, or International Business
Machines Corp., at $153 billion. It is the world's biggest games
publisher by revenue with a dominant share in China. It has a huge
distribution network for mobile games in its ubiquitous WeChat
messaging service, which boasts 762 million monthly active
users.
Still, some investors argue that Mr. Lau is making a risky bet
on Supercell churning out more hit games. Tencent's deal valued the
Finnish company at a pricey $10.2 billion, almost double what it
was a year earlier. Other top mobile game companies such as Rovio
Entertainment Ltd., the company behind the "Angry Birds" franchise,
have struggled to repeat early success with new offerings.
Supercell also faces up-and-coming rivals such as Silicon Valley
startup Machine Zone Inc., known for "Game of War: Fire Age."
Japan's Nintendo Co. is also expanding into mobile games with its
part-ownership in the "Poké mon Go" sensation.
"This deal is a test of Tencent's ability to make overseas
acquisitions work," said Tony Chu, portfolio manager at RS
Investments, which manages $17 billion. "As long as Supercell is
doing well, Tencent can leave it alone. The question is: what will
it do if Supercell's growth slows?"
Tencent declined to make Mr. Lau available for an interview.
When it announced the deal last month, Mr. Lau said that Tencent
had been interested in investing in Supercell for years. An attempt
three years ago to buy Supercell failed over disagreements on
valuation, according to a person familiar with the situation.
"If you think about how long we have waited, we are going to be
in this for a very, very long time," Mr. Lau said.
After growing up in Hong Kong, Mr. Lau studied electrical
engineering at the University of Michigan. After a stint at
consulting firm McKinsey & Co., he joined Goldman Sachs, where
he managed Tencent's 2004 initial public offering in Hong Kong.
Mr. Lau added a dose of financial savvy to Tencent's executive
team, led by founder Ma Huateng, who is known as a detail-oriented
product manager obsessed with quality. Colleagues say Mr. Ma, known
as Pony, gives Mr. Lau wide latitude to steer Tencent's overseas
partnerships.
He "brought a degree of professionalism to Tencent," says
Richard Ji, chief investment officer of the $900 million All-Stars
Investment Ltd., which owns Tencent shares.
Tencent's global reach has been widened through deals Mr. Lau
put together to buy Los Angeles-based Riot Games, which makes the
popular "League of Legends" game, and a stake in Activision
Blizzard Inc., owner of the "Call of Duty" and "Warcraft"
franchises.
At home, Mr. Lau was the driving force behind lucrative stakes
in e-commerce company JD.com Inc. and $28 billion ride-hailing
startup Didi Chuxing Technology Co., which also counts Apple Inc.
as an investor.
His aggressive deal-making ruffled some feathers earlier this
year when he offered $1 billion to a startup backed by rival
Alibaba Group Holding Ltd. on the condition that it merged with a
Tencent backed-competitor, according to people familiar with the
situation. The deal, according to the people, sparked a rift
between the combined company, Meituan-Dianping, and Alibaba, which
unloaded its shares, hampering the startup's fundraising efforts at
the time.
Tencent and Alibaba declined to comment.
Still, venture capitalists say Mr. Lau's ability to find common
ground with potential partners has helped Tencent seal key deals.
In 2014, when Tencent's e-commerce operations were gaining little
traction, it changed tack and teamed up with JD.com. Mr. Lau
swapped ownership of Tencent's struggling e-commerce business for
15% of JD.com, turning a cash-burning business with poor prospects
into what is now a $5.2 billion stake in China's second-largest
online shopping company.
Mr. Lau has been behind consolidation in China's startup world.
Before Tencent-backed online shopping startup Meilishuo.com merged
with rival Mogujie.com in January, Mr. Lau met with Mogujie founder
Chen Qi.
"Martin reassured me about the future and made it clear that
Tencent would give us sufficient support," Mr. Chen said.
Matthias Verbergt contributed to this article.
Write to Juro Osawa at juro.osawa@wsj.com and Rick Carew at
rick.carew@wsj.com
(END) Dow Jones Newswires
July 17, 2016 22:15 ET (02:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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