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Private equity group CVC is taking a minority stake in Istanbul-based Dream Games in a deal that values the maker of hit mobile app Royal Match at close to $5bn.
The deal, which was announced on Thursday without disclosing financial terms, will see a huge windfall for Dream Games’ venture capital backers, including its first investors Balderton and Makers Fund, as well as Index Ventures, Sequoia Capital and IVP.
CVC and Blackstone are investing a total of more than $2bn in the deal across equity and debt, people familiar with the matter said. Dream Games’ five co-founders will remain majority shareholders, with its existing VC investors selling all their stakes, these people said. The deal values the company at between $4bn-$5bn.
Such exits have become scarce for VCs at a time when stock market turbulence has deterred many tech start-ups from striking M&A deals or going public.
Dream Games was founded by former executives at Peak Games, another Turkish mobile developer that was acquired in 2020 by US rival Zynga, and had previously been valued at $2.75bn in early 2022.
Its first title, the puzzler Royal Match, dethroned long-running hit Candy Crush Saga as the world’s most lucrative mobile game in mid-2023. Late last year, Dream launched a sequel, Royal Kingdom, with an all-star marketing campaign featuring LeBron James, Jimmy Fallon, Amy Poehler and Shakira.
“Dream Games has created some of the world’s most beloved and commercially successful [intellectual property],” said Nick Clarry, managing partner and head of CVC’s Sports, Media and Entertainment team.
CVC has previously backed groups in the games sector such as RuneScape developer Jagex, which it acquired last year from Carlyle for nearly £1bn.
The falling cost of developing and launching mobile games has led to thousands of low-quality titles flooding app stores, at the same time as growth in the video gaming industry as a whole has slowed following the Covid-19 pandemic’s boom.
Dream Games has taken a different approach to most mobile developers, focusing on creating characters and storylines that would help retain users, and polishing its apps to make a more satisfying experience for players. Its games are free of ads, generating revenue from in-app purchases of coins that can buy extra lives or boost progress through its levels.
Rob Moffat, partner at Balderton, said that when he first invested in 2019, “many VCs had lost interest in mobile gaming which they believed was becoming too competitive and too expensive in which to grow a new game”.
“Dream were [an] exceptional team, with their intensity, clarity of vision and track record,” he said in a LinkedIn post.
Michael Cheung, general partner at Makers Fund, said in a LinkedIn post that “Dream Games’ success now speaks for itself, with the company growing to $2.5bn annual gross bookings in 2024”.
In its most recently available accounts published on the UK’s Companies House registry, Dream Games posted revenues of $1.5bn in 2023, up from $644mn the previous year.
But it also spent $1bn in marketing and other distribution expenses, contributing to a $130mn pre-tax loss in 2023, showing the huge investment in winning players’ attention required to break through in today’s overcrowded app store marketplace.
Soner Aydemir, Dream Games’ co-founder and chief executive, said: “We are incredibly proud of what our team has built so far, and we’re excited to enter this next phase of growth with the support of our new investors.”
Dream Games and CVC declined to comment on the terms of the deal, which is expected to close in the third quarter of this year.
