Providence to make six times its money on ZeniMax

Microsoft on Monday announced its agreement to buy the video gaming provider for $7.5bn.

About 13 years into its investment, Providence Equity is set to make 6x its money on sale of ZeniMax Media, a source familiar with the deal told PE Hub.

Microsoft on Monday announced its agreement to buy the video gaming provider for $7.5 billion. The deal is expected to close in the second half of the 2021 fiscal year, according to the software giant’s announcement.

ZeniMax, based in Rockville, Maryland, is best known as the parent company of Bethesda Softworks, one of the largest privately held game developers and publishers in the world. Bethesda’s critically acclaimed and best-selling franchises include The Elder Scrolls, Fallout, DOOM, Quake, Wolfenstein and Dishonored, among others.

Microsoft’s planned acquisition is set to boost the company’s XBox offering with new exclusive games and strengthen its competitive position with Sony’s PlayStation console.

Providence, the only institutional investor in ZeniMax, originally invested $300 million in the company in October 2007.  In 2010, the firm injected an additional $150 million in ZeniMax.

The company has transformed significantly under Providence’s hold. When the buyout firm first invested in the gaming company, it operated just one studio in the US and its employee count hovered at around 200, the person said.

Today the global company encompasses eight game studios in the US and an employee count of 2,300 across 15 offices worldwide.

Providence will exit its investment in full in connection with the transaction.

Providence declined to comment for the story.

Action Item: See Providence’s latest form ADV here.