Insight Venture Partners now owns 55%; R&D investment pulls FY11 profits to Â£6.7m
A New York venture capital firm has purchased further shares in Jagex to increase its stake to 55 per cent, effectively transferring control of the Runescape developer from the UK to the US.
Financial documents seen by Develop show that Insight Venture Partners has acquired another twenty per cent of the Cambridge-based outfit. The VC firm previously acquired 35 per cent of the company in 2005.
Jagex agreed to pay off £2.5 million in expenses as part of the deal – just one of many implications that Insight paid substantial sums for the equity.
The controlling purchase was made at some stage last year but its effect on company equity has only now been declared.
Jagex announced Insight’s investment in February last year. Jeff Horing, managing director at the investment firm, at the time said the new investment “will help accelerate” the studio’s product launches.
Horing, along with Insight partner Alex Crisses, both have seats on the Jagex board of directors, along with CEO Mark Gerhard and two other VC firms.
It means that one of the UK games industry’s leading lights is now controlled by US investors.
Gerhard is a board member of UK trade body Tiga.
It is believed that Jagex co-founder Andrew Gower has offloaded his ownership of the company to Insight, netting millions in the process.
Jagex said it made £45.3 million in the twelve months ending March 2011, though profits after tax were at £6.7 million due to significant investment in new projects.
Profits the year prior were more than double, at £13.7 million.
The US-owned developer said it has significant reserves of cash and is investing in multiple projects.
The company, currently in the process relocating within Cambridge, had about 400 employees by March 2011. It is believe that today it has significantly more.
(Date of publication: Jan 9th 2012, 15:45 GMT. Incorrect date displayed above due to publishing error)