Buyout fund Carlyle to swoop for Cambridge RuneScape studio Jagex

US private equity giant Carlyle Group has snapped up a majority stake in the Cambridge games studio behind the hit online video game Runescape.

Jagex, a games developer with more than 450 employees, had revenues of £111m last year and profits of £49m on the back of its fantasy online role playing game. 

The value of the deal is expected to be more than the $530m (£390m) paid for Jagex when it was acquired from its previous Chinese owners by a US holding company last year. A deal is expected to be announced in the coming days.

Runescape has signed up nearly 300 million users over the last 20 years and is still played by millions of people. Players build up their skills and collect resources in an online fantasy world. Its latest accounts show 3.4 million players pay subscriptions to its online game.

First launched as a simple browser game in 2001, Runescape is one of the longest-running online games in history, and has remained popular with gamers and gone through multiple relaunches including a mobile version.

Six Carlyle directors have been appointed to Jagex’s board, including Carlyle’s vice-president of buyouts Tyler Parker and its managing director of technology Ashley Evans.

The US buyouts firm has more than $230bn of assets under management.

Jagex's recent history has been troubled by its sale to a Chinese conglomorate in 2016 for $300m. Its new owner was a mining company with little background in technology.

In its accounts, Jagex admitted the parent experienced "market challenges" which led to trouble with retention of key staff. It was ultimately sold to US holding firm, Macarthur Fortune Holding, in May last year.

The UK games sector has been vibrant for dealmaking. A bidding war in December saw EA snatch listed racing simulator-maker Codemasters from the jaws of Grand Theft Auto developer Take-Two in a £945m deal.

Chinese gaming giant Tencent, meanwhile, has built up stakes in UK developers while Microsoft and SoftBank-backed Improbable have also been active in acquiring studios.

Lockdown has primed interest from investors in video games studios as consumers are forced to stay at home and spend more time glued to their screens. Shares in UK-listed games studios have more than doubled during the pandemic.

A Jagex spokesman said: “We’re delighted to welcome the new board directors to Jagex and proud to have their expertise, counsel, and support on our side as we look forward to a hugely exciting year for Jagex, the RuneScape games, and beyond. We’ll be talking more about the appointments in the days to come.”

Carlyle declined to comment.