CARY (North Carolina) • As people flock to video games and social networks to fight boredom during the pandemic, investors in the company that owns two of the biggest lockdown hits are betting that those habits will stick.
Start-up Epic Games, which developed battle game Fortnite and acquired networking app Houseparty, is close to raising a US$750 million (S$1 billion) round of funding at a valuation of about US$17 billion, according to people familiar with the matter.
New investors T. Rowe Price Group and Baillie Gifford will contribute to the round, while existing investors, including KKR, will also participate, the people said, asking not to be identified as the details are not public.
The valuation, which includes the new funding, is a bump up from the US$15 billion valuation the company garnered in 2018.
The funding round is not finalised and some of the details could still change, the people said.
Representatives for Epic Games, Baillie Gifford, KKR and T. Rowe Price declined to comment.
The round is one example of how, even as many start-ups lay off employees and scale back operations, there could still be opportunities for companies that provide what many now see as essential distractions.
Epic Games and its video-game competitors are becoming destinations to watch concerts and debut movie trailers.
Nearly 28 million fans flocked to an April concert by rapper Travis Scott held virtually in Fortnite. Last month, Epic Games aired a trailer for the upcoming Christopher Nolan movie Tenet on Fortnite.
Fortnite is a battle and survival game that is popular with teenagers.
Epic Games, which was founded in 1991 by Mr Tim Sweeney from his parents' house in Potomac, Maryland, also owns Houseparty, which integrates games and trivia into group video calls. It bought the platform for an undisclosed amount about a year ago before it became a breakout hit during the pandemic. The app's last private valuation was about US$70 million, according to PitchBook data.
Video-game companies have been taking advantage of the interest to do deals. Zynga agreed this month to buy Turkish mobile-game maker Peak for US$1.8 billion.
Mr Sweeney sold 40 per cent of the company to Chinese Internet giant Tencent Holdings in 2012. Other minority owners include Walt Disney, aXiomatic Gaming and Endeavor Group.
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