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Singapore-based investment fund 3D Investment Partners has acquired a 5.47% stake in Square Enix Holdings, Reuters reported on April 28. The stated purpose for acquiring the assets is "pure investment, and depending on circumstances, to offer advice or make significant proposals to management."

3D Investment Partners is known for being an activist investor, meaning that it seeks to buy significant stakes in companies in order to influence how they are managed (please note that this term has nothing to do with political activism). Activist investors often target companies that are undervalued or suffering from poor management. Their strategy is generally to invest in these companies and then push management to take actions that will increase corporate value – such as enhancing shareholder returns, improving the business portfolio, or replacing executives – in order to secure a solid return on investment (source: Mutual Inc).

This particular Singaporean activist happens to be somewhat infamous among businesses in Japan, having gained recognition through its investments in big corporations like Toshiba, Fuji Soft and Sapporo Holdings. As reported by Bloomberg, the investor has consistently shown an "aggressive" attitude towards its Japanese investees, making demands for large-scale business reforms, requesting executive resignations and placement of external directors, and publicly criticizing poor management decisions.

Sentaku magazine quotes a company head as calling 3D's demands "heart-wrenchingly extreme" and a securities firm executive as calling the fund "the most dynamic and feared activist in Japan." It might be worth mentioning that this reputation is from the businesses leaders' perspective, not the consumers' perspective.

How relevant is this for Square Enix, though? Reuters mentions that 3D will be offering advice and "significant" proposals to its management depending on the circumstances, but the extent of their influence is still unclear. 3D acquired a major stake in Square Enix as of April 21, but even way before that, the latter has been putting into motion big changes in face of declining performance, including its new mid-term management plan and reformed management structure.

Square Enix targeted by activist investment fund known for "aggressive" involvement in management - AUTOMATON WEST

An activist fund known for making strong demands from its investees has acquired a 5.47% stake in Square Enix Holdings.

automaton-media.com

 

[Shifty1897]

 

[channie]

You know they're not after your interests do you?

 

[Kilau]

You know they're not after your interests do you?

What kind of activist are you?

 

[Shifty1897]

You know they're not after your interests do you?

Square isn't either, but they might get closer to selling a product I actually want to buy.

 

[justiceiro]

Well, when you talk about mismanagement, it's really hard to go worse than square enix.

 

[Astray]

I think we will see some big heads roll at Squeenix in due time.

Because these guys are clearly gonna push the board to do stock buyback using that big pile of cash. Which will essentially eliminate the company's safety net and force them to make hard decisions.

 

[Loomy]

Square isn't either, but they might get closer to selling a product I actually want to buy.

No. This is how you get a (another, more high budget) Final Fantasy battle royale, more fucked up monetization in FF14, and other shit like that. These guys aren't there to force SE to make better games. They're there to force SE to make as much money as possible before they sell their stake right before it implodes.

 

[Zacfoldor]

Give the activist investor a chance. Instead of Parasite Eve or Vagrant Story we get this:

Candyland but it's a gaas with none of the fun of candyland.

 

[PeteBull]

Give the activist investor a chance. Instead of Parasite Eve or Vagrant Story we get this:

Candyland but it's a gaas with none of the fun of candyland.

Those activists will force square to do netflix like flatassed and flatchested lara game before they allow any proper classic ip, bro, they likely never played it/dont know about it existence, and for that reason only arent offended by it, let us all remind that scene from last parasite eve game:

We all know activits only allow women naked scenes when they look like this:

 

[Pejo]

Well, when you talk about mismanagement, it's really hard to go worse than square enix.

But yea S-E is up there for sure.

 

[adamsapple]

How will this effect their normal operations?

 

[K' Dash]

Just sell to Sony already.

 

[Killer8]

It's hard to imagine a more mismanaged publisher than Square Enix. I remember a few years ago seeing Forspoken, Harvestella, Valkyrie Elysium and DioField Chronicles releasing one after another and thinking this is just dog shit upon dog shit. You could get one good AAA game for the budget of these. They are also effectively creatively bankrupt. When they do make a good game it's a remake.

 

[Trogdor1123]

I'm in my imagination it's a rich dude that really loves Chrono trigger and wants a sequel

 

[Fbh]

I'm in my imagination it's a rich dude that really loves Chrono trigger and wants a sequel

It's more likely to be a rich dude that saw Chrono Trigger listed as a valuable IP that Square owns and is now thinking about how much money he can make by bringing it back as a Battle Royale extraction shooter with gacha mechanics

 

[Gp1]

Square-Enix-Eidos tanked... (sales, revenue or game wise)
Deus Ex Human,
Deus Ex Mankind,
Thief,
Just Cause 4,
Whatever Life is strange game was the last one,
Marvel Avengers (hilarious how they fail an Avengers at the height of its popularity),
Marvel Galaxy,
Final Fantasy 13,
14 (launch),
15,
16,
Dissidia,
Valkyrie Elysium,
Front Mission 1 remake,
2 remake,
Left Alive,
The foam game,
Forspoken
Hitman (10 fucking years since launch and i still don't understand what i get when i buy the game)

Yep. Let the activist take over

edit. "(please note that this term has nothing to do with political activism). Activist investors often target companies that are undervalued or suffering from poor management. "

 

[StereoVsn]

It's hard to imagine a more mismanaged publisher than Square Enix. I remember a few years ago seeing Forspoken, Harvestella, Valkyrie Elysium and DioField Chronicles releasing one after another and thinking this is just dog shit upon dog shit. You could get one good AAA game for the budget of these. They are also effectively creatively bankrupt. When they do make a good game it's a remake.

Diofield was actually pretty decent, but the rest I'll give you!

 

[Unknown?]

Square isn't either, but they might get closer to selling a product I actually want to buy.

You want a game where men menstruate?

 

[Shifty1897]

No. This is how you get a (another, more high budget) Final Fantasy battle royale, more fucked up monetization in FF14, and other shit like that. These guys aren't there to force SE to make better games. They're there to force SE to make as much money as possible before they sell their stake right before it implodes.

Square is probably already making FF17 a FPS battle royale with half the story in a separate gacha phone game. They're already a sinking ship, maybe a hostile takeover attempt will wake them up.

 

[Hudo]

What's the track record of 3D Investment Partners?

 

[Shifty1897]

You want a game where men menstruate?

We already have that, it's FF15.

 

[Bernardougf]

Lets hope is "lets again make great games that sell a lot with your classic ips " activism and not "lets make.... gaaaaaaaas"

 

[Astray]

How will this effect their normal operations?

Depends on what the activist fund will push Square to do. Could be good or bad.

 

[Astray]

Hitman (10 fucking years since launch and i still don't understand what i get when i buy the game)

IO Interactive bought themselves out of Square years ago.

 

[Metnut]

These guys are bad news. They'd likely try to turn Square into Konami 2.0.

 

[poodaddy]

What's the track record of 3D Investment Partners?

They're quite good at trimming the fat, that's for sure. Generally speaking, they know what they're doing when it comes to cutting costs and producing a big return on their investments, they generally accomplish what they set out to accomplish, but they're quite cruel and heartless when it comes to the human side of things, which means I guarantee you these guys won't mind putting out some GAS games when the market wants them, which they clearly don't right now. I think this will end up potentially saving Square as a company, but, there's gonna be blood.

 

[Hudo]

They're quite good at trimming the fat, that's for sure. Generally speaking, they know what they're doing when it comes to cutting costs and producing a big return on their investments, they generally accomplish what they set out to accomplish, but they're quite cruel and heartless when it comes to the human side of things, which means I guarantee you these guys won't mind putting out some GAS games when the market wants them, which they clearly don't right now. I think this will end up potentially saving Square as a company, but, there's gonna be blood.

That sound to me that Mana, SaGa and Nier won't be getting any new games and FF17 will have some live-service component. Provided that they can strong-arm Square management to that extent.

 

[Labadal]

Whoever thes guys are: Please, get FF Tactics released on PC.

Get Bahumut Lagoon, and The Treasure of the Rudras available on modern platforms, and localized.

 

[GHound]

"Oh wow if they get their way maybe Square will..."

Reality: Ten times more gachaslop and 80 more GaaS attempts. THERE SHE BLOOOOOOOOOOWS!

 

[Gp1]

IO Interactive bought themselves out of Square years ago.

The beginning of the Hitman episodic shitshow thing was still under Square umbrella, so the critic remains.

 

[@gkTH]

considering (unexpected) success of Expedition 33, I'm sure SE would need an aggressive restructuring soon enough.

 

[Astray]

Serkan Toto made a video about this for those who want to know more.

 

[Jinzo Prime]

Serkan Toto made a video about this for those who want to know more.

The new info here being that Square now has two activist investors nipping at the heels.

The new investor has already purposed that SE should do a big stock buyback, which Square rejected, and the other invstor has not revealed what they want publicly.

SE needs to get their house in order, they got coyotes at the threshold.

 

[Deft Beck]

considering (unexpected) success of Expedition 33, I'm sure SE would need an aggressive restructuring soon enough.

As good as Expedition 33 is, its sales are pennies compared to Square Enix's output. I doubt they're going to see it as much of a threat.

 

[Astray]

As good as Expedition 33 is, its sales are pennies compared to Square Enix's output. I doubt they're going to see it as much of a threat.

People forget that Square had 3 million FF16 sales in less than a week and still got disappointed in the end.

AAA Publishers work on a completely different scale.

 

[Pejo]

As good as Expedition 33 is, its sales are pennies compared to Square Enix's output. I doubt they're going to see it as much of a threat.

Yea Expedition 33 devs also spent $5-6 million (and 5~ years) to make the game vs, let's say, FF16 which was 50+ million (and 7~ years). Reminder that corporations aren't solely graded on sales, growth and profitability are also important, sometimes even more so.

 

[Baemono]

How will this effect their normal operations?

Investment firms buys assets, try to make them grow as much as possible value-wise, and then sell it to maximise profits. Works great for real estate, and can be work great with private equity, if you know your business or trust the people in charge. But from what I understand here, this investment firm likes to shake things up, putting external people in charge, and will aim for the maximum profits possible, which is a bit complicated when it comes to any art forms, such as video games.

So we can expect more easy cash-grabs, less costly projects.

 

[DonkeyPunchJr]

As good as Expedition 33 is, its sales are pennies compared to Square Enix's output. I doubt they're going to see it as much of a threat.

Not a threat in terms of stealing their market share.

But it will definitely have their investors asking how the fuck S-E got beat at their own game by some new developer with a fraction of the size + budget.

 

[Astray]

The new info here being that Square now has two activist investors nipping at the heels.

The new investor has already purposed that SE should do a big stock buyback, which Square rejected, and the other invstor has not revealed what they want publicly.

SE needs to get their house in order, they got coyotes at the threshold.

SE really is the Japanese Ubisoft in a lot of ways.

 

[Go_Ly_Dow]

The stock price has been on a mad run despite not releasing much this year.