Providence Equity's Sale of ZeniMax Will Bring Lucrative End to 13-Year Deal

By Laura Kreutzer 

Private-equity firm Providence Equity Partners stands to win big on the sale of its stake in videogame producer and Bethesda Softworks parent ZeniMax Media Inc.

Microsoft Corp. has agreed to acquire the Rockville, Md.-based company for $7.5 billion in cash. The deal promises to return more than six times Providence Equity's investment in the company, which dates back to 2007, according to a person with knowledge of the deal.

When Providence made its first investment in ZeniMax in 2007, the game maker had a single studio and around 200 employees. Providence's roughly $300 million investment gave the firm a 25% stake in the company and valued it at around $1.2 billion, Dow Jones Newswires reported at the time. ZeniMax's most popular product then was the single-player fantasy game "Elder Scrolls IV: Oblivion."

The private-equity firm funded its initial investment out of its sixth flagship buyout fund, Providence Equity Partners VI LP, which closed with around $12 billion in 2007.

In the years that followed, ZeniMax steadily picked up other videogame studios. It acquired id Software in 2009, maker of videogames "Wolfenstein," "Doom" and "Quake," and Arkane Studio, producer of "Arx Fatalis" and "Dark Messiah of Might and Magic," in 2010. That same year, Providence invested another $150 million in the company.

ZeniMax now has grown to some 2,300 employees in 15 offices around the world, including eight development studios, the person said.

Founded in 1989, Providence Equity focuses its investments in areas such as media, telecommunications, education, and the software and services industries. It managed more than $22 billion in client assets as of Dec. 31, 2019, according to the firm's latest registered investment adviser filing.

Write to Laura Kreutzer at [e-mail]

(END) Dow Jones Newswires

September 21, 2020 18:20 ET (22:20 GMT)

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