Lehman Brothers, which announced along with IBM a joint initial investment of $180 million in the "China Investment Fund," took center stage again recently when it announced the completion of fundraising for the new "Merchant Banking Partners IV" fund with a total of $3.3 billion in committed investments. The fund is global in nature and targets small and medium-sized enterprise investment opportunities in Europe, North America and Asia.

The final destination of this fund, like all new funds of this category, is none other than China. After several difficult investment rounds, the online game market in China now has the full attention of venture capitalists. Keywords such as financing, integration and listing have made the online game market dazzle. In addition, anything related to automobile consumption services is also gaining momentum.

Online gaming success stories

The online game market in China had been quiet for more than two years. But since the beginning of 2007, success stories have appeared one after another. Newcomers have secured investments and forerunners have been busy tackling strategic acquisitions and company listings.

Sources revealed that Duowan.com, a gaming website founded by former NetEase Chief Editor Li Xueling, secured $4 million from venture capitalists in its first investment round. Targeting online games in China, Duowan.com has its own strategy and technologies. Currently, it is one of the top three professional gaming portals in China. Kingsoft CEO Lei Jun became the "business angel" of Li by investing 1 million yuan in the new and developing company.

Companies that obtained an initial round of funding also included Frenzoo, a virtual reality online gaming company based in Hong Kong. Frenzoo announced that its first round of fundraising has been completed. The investor was Ambient Sound Investments, an investment company founded by four former Skype engineers. Frenzoo's competitor HiPiHi, another virtual reality online gaming company, also divulged that it had obtained venture capital investments of almost $10 million from Japan, Europe and the United States.

Mergers and acquisitions in the online game sector also broke records. On May 16, Finet Group Ltd., a provider of financial information services, Internet advertising and investment holding headquartered in Hong Kong, announced its total acquisition of Hangzhou Tianchang Network Technology Co. Ltd., a 3D online game development and operating company, for approximately 200 million yuan (HK$206.4 million). On May 21, Electronic Arts (EA) announced its purchase of 15 percent of the common shares of The9 for $167 million. As a result, The9 has become the sole agent for EA's premium title FIFA Online on the Chinese mainland. In comparison to the above two large acquisitions, the acquisition of online game operator Guangtong Games by CDC Games was quite commonplace. Nevertheless, fully leveraging Guangtong Games' game distribution expertise, CDC Games will launch a new game called Special Force at the end of June whose performance cannot be ignored.

The harvest season

"Currently, the Asia-Pacific region is the largest online game market in the world," said Ke Zhida, President and CEO of Red 5 Studios, who thought favorably of the Chinese market. "In China, annual online game spending is more than 3.9 billion yuan and the market potential is enormous."

Also sharing the same view was Finet Group, which has set its target on online games after searching for businesses with explosive growth potential to increase shareholder value. "I believe this will become Finet Group's tremendous profit growth trigger in the next few years," said Yu Gang, Chairman of Finet Group.