State's share in Nexon holding firm eyed for sovereign wealth fund

Nexon Korea headquarters in Seongnam, Gyeonggi Province / Korea Times file

The government is considering a plan to transfer a sizable stake in game studio Nexon’s holding company, NXC, to a Korean-style sovereign wealth fund being set up by the Lee Jae Myung administration, in an apparent move to use the government-held stake for national interests rather than selling it to foreign capitals including China’s Tencent.

According to government officials, Monday, the government is exploring various fundraising options for the proposed wealth fund worth 20 trillion won ($13.67 billion), including transferring government-held tax-accepted corporate stocks into the fund as an investment in kind.

Of them, the largest chunk will be the approximately 30 percent stake of NXC valued at 4.7 trillion won. The government acquired the stake after the family of Nexon founder Kim Jung-ju transferred the shares as part of their inheritance tax payment following his death in 2022.

So far, the government has tried to sell the stake through four rounds of open bidding, but all failed due to the deal’s size and the fact that the stake does not provide control of the company. The remaining 70 percent stake is fully owned by the founder's family.

As part of the plan, the government is expected to put NXC shares worth 1 trillion won up for sale because it has already included it in this year’s national budget, and transfer the remainder to the state wealth fund, according to the officials.

Contributing the NXC stake to the sovereign wealth fund is seen as a strategic move by the government, as Chinese gaming giant Tencent has long been mentioned as a potential bidder.

Even before Kim’s death, Tencent had attempted to acquire Nexon in 2019, forming a consortium with a number of private equities. The Chinese giant sought to gain direct control over Dungeon & Fighter, one of Nexon’s biggest hit titles in China, rather than continue paying licensing fees for the game's intellectual property (IP).

A promotion image of Nexon's Dungeon & Fighter / Courtesy of Nexon

In June 2025, Bloomberg reported that Tencent was reviewing a plan to acquire Nexon for about $15 billion, although details of the deal structure, including the specific target and the size of the stake, were not disclosed. At the time, Tencent denied the report, and Nexon also declined to comment.

However, local media reported on Thursday that senior executives of Tencent had visited Nexon to explore a possible equity acquisition.

Tencent is already the second-largest shareholder in a number of Korea’s biggest game developers, including Netmarble, Krafton and Shift Up. As a result, concerns have been growing that if the Chinese tech giant were to acquire a significant stake in Nexon, Korea’s largest game company, China’s influence over Korea’s gaming industry would become excessive, effectively putting much of the sector under the sway of Chinese capital.

It remains unclear whether Tencent is interested in the government-held stake in NXC or the shares owned by the founder’s family. However, industry officials view the government’s consideration of transferring its stake to a sovereign wealth fund as a signal that it is wary of a significant Nexon stake falling into Chinese capital.

“It is hard to predict whether the founder's family will sell their stake to Tencent, but it seems unlikely that the government would sell the stake it holds to Tencent,” an industry official said.

“The government has recently tightened its rules on selling state-owned assets, requiring prior reporting to the National Assembly for assets worth more than 30 billion won. Given the concerns over the domestic gaming industry’s sovereignty, any such deal would likely trigger a political controversy.”