Under the deal, Allied will pay approximately $7.0m (£5.5m/€6.4m) to acquire the stake from Ourgame International Holdings. Allied will also assume a controlling interest in the developer’s board.
The deal remains subject to certain closing conditions, but is expected to close by the end of September.
Founded in Beijing, China in April 2022, Zhihe mainly develops card and Mahjong casual games. During its first nine months of operation in fiscal year 2022, Zhihe posted $10.0m in revenue.
“We are delighted to announce our strategic investment in Beijing Lianzhong Zhihe Technology Co,” Allied CEO Yinghua Chen said. “In just over a year, Zhihe has made remarkable strides in the expansive mobile games market, which will harmonise seamlessly with our strategic goals and the establishment of our Allied Mobile Entertainment (AME) subsidiary.
“Zhihe brings a compelling library of popular mobile games that will bring significant traction to AME, while also providing distribution channels for our current portfolio of casual mobile games that are in the process of testing and pre-public launching.
“We look forward to working with their leadership team to drive future value and realise the synergies of our businesses.”
Wider growth plans at Allied
The announcement comes on the back of Allied posting its second-quarter and first-half results earlier this week.
Revenue in the three months to 30 June was $3.3m, 182.3% up from $1.2m in the previous year. For the first half, revenue was up 25.0% to $4.5m.
Speaking after the results were published, Chen talked up the potential of further growth, referring back to a major restructure of the business late last year.
Details of this were revealed in December 2022, including restructuring the existing esports business. Allied also widened its focus to include a broader array of entertainment and gaming products and services.
The initiative included establishing two new subsidiaries in AME and Allied Experiential Entertainment (AEE). AME is focused on the mobile games market, while AEE operates within entertainment live events, experiential entertainment venue operation, management and consultation.
In addition, the business rebranded from Allied Esports Entertainment to reflect its new direction. Q2 was the second full quarter since the restructure.