Swedish entertainment firm Modern Times Group (MTG) has announced a joint venture with Chinese live streaming platform Huya that will see the latter acquire a US$30 million minority stake in ESL, MTG’s esports subsidiary.
The strategic partnership is part of MTG’s wider plans to expand into China and will see the two parties host and build local competitive gaming competitions that will be worked into ESL’s global tournament calendar.
As part of the transaction, which values ESL at US$425 million, the esports firm will issue new shares at a value of US$22 million to facilitate further expansion.
MTG will retain majority ownership of ESL upon completion of the transaction, which is expected to take place during the fourth calendar quarter in 2019.
“We are excited to announce this term sheet for an important strategic partnership which provides us with a strong partner in Huya to pave the way for a successful ESL expansion into the thriving Chinese esport and gaming market in due time," said MTG president and chief executive Jørgen Madsen Lindemann.
ESL has been upping its global expansion efforts in recent times. At the end of last year the company secured a US$100 million extension of its partnership with technology giant Intel with a specific focus on bringing new esports tournaments to Asia.
Huya, which is backed by internet giant Tencent, is ESL’s first new shareholder since MTG’s initial investment in the company in 2015.
“We are pleased to establish a close partnership with ESL, which demonstrates Huya's further penetration into the global esports sector,” said Huya chief executive Rongjie Dong. “Together with ESL, we are thrilled to bring more world class global esports content to Chinese gaming enthusiasts.”
An official release added that the Chinese esports market will generate revenues of US$210 million in 2019, surpassing Western Europe as the second-largest esports region globally in terms of revenues.