Certain Affinity and Leyou Announce Strategic Partnership

Austin, TX – October 16, 2017Leyou Technologies Holdings Limited (EHK 1089) today announced that it has acquired a minority stake in Certain Affinity, Austin’s largest independent video game developer. Certain Affinity will continue to operate independently, expanding operations with its new headquarters and new game initiatives.

Leyou will provide Certain Affinity total consideration of US$10M in exchange for a 20% ownership stake in the company. This follows an earlier US$5M investment in Certain Affinity by  Capstar Partners, an Austin, Texas-based private investment firm. Under the agreement with Leyou, Certain Affinity will develop and produce an original game based on certain licensed intellectual properties, under the direction of, and with input and cooperation from Leyou, and in return will receive a portion of the net revenue from the game. Leyou will also provide Certain Affinity with an interest-free, non-recourse loan facility of up to US$15M to pay for costs and expenses incurred in connection with development of the game, solely recoupable from the revenue derived from the game. Leyou also has the option to buy all of the remaining shares of the company in 2021 for a valuation based on an agreed formula, not to exceed US$150M.

Certain Affinity has a proven track record developing innovative, triple-A action games, including both original titles and co-development on multiple games in the Call of Duty and Halo franchises, DOOM, and Left 4 Dead. The company recently marked ten years of success by relocating to its new headquarters in a wholly-owned building in North Central Austin.

“I have enormous respect for Alex Xu, Leyou’s CEO, and the team that he’s assembled,” said Max Hoberman, Certain Affinity’s President and Founder. “This agreement launches a partnership to create an ambitious and exciting new game together, while the additional investment allows us to continue developing our own original IPs. Certain Affinity has a history of co-development on some of the biggest action franchises in the industry, and we will continue this work in parallel. Our commitment to growing the company and expanding our presence in Austin has never been stronger.”

“With its proven track record producing high-quality video games, Certain Affinity possesses the technical capability and talent to create highly successful titles, which in turn will assist Leyou in further diversifying its video game portfolio and enhancing its revenue streams,” said Alex Xu, CEO of Leyou Technologies. “This strategic investment into Certain Affinity is consistent with the growth strategy of our Company as we continue to look for opportunities to invest and increase our market share in the video gaming industry.”

Steve Hicks, Executive Chairman of Capstar Partners, had this to say about the news: “We’re highly selective in who we invest in, as we treat each investment as a true strategic partnership. Certain Affinity has built something special in Austin, and from the moment we met Max, Mojdeh, and the rest of their leadership team we knew that we wanted to be a part of it. We’re excited to welcome Leyou as a strategic partner, as they will provide crucial expertise and support as Certain Affinity makes lead development and original IP a higher proportion of their portfolio.”

About Certain Affinity

Certain Affinity was founded in 2006 by Max Hoberman, a ten-year Bungie veteran and former Multiplayer and Online Lead for early games in the Halo franchise. Certain Affinity creates innovative, triple-A action games which when combined have sold more than 75 million copies. Notable releases include Call of Duty: Black Ops, DOOM, Halo: The Master Chief Collection, Halo 4, Left 4 Dead, Crimson Alliance, Age of Booty and more. Certain Affinity has more than 125 full-time employees, including veterans from dozens of successful game studios, and has generated more than $100M in combined revenue for the Austin area.

About Leyou Technologies Holdings Limited

Leyou is a vigorous, ambitious and rapidly expanding developer and publisher of PC/console video games in the global market. With a high quality and free-to-play focused product strategy, Leyou has become a leading player in the global free-to-play online multiplayer games market, and released some of world’s most popular titles such as Warframe and Dirty Bomb.

Headquartered in Hong Kong, Leyou has studios or branches across the world, including China, US, UK and Canada. Leyou owns or invests in multiple reputable world-class game studios with strong development and publishing capabilities, such as Digital Extremes and Splash Damage, who used to be developer/co-developer of AAA PC/Console franchises such as Gears of War, Wolfenstein, Doom, Unreal Tournament, Bioshock, etc.

Leyou’s shares are listed in Hong Kong Stock Exchange, and the Group has around 600 full-time employees.

About Capstar Partners

Capstar Partners is an Austin, Texas-based private investment firm investing in lower middle market operating companies to accelerate growth. Capstar forms long-term partnerships with management teams of entrepreneurial and family-owned businesses to create substantial value for all stakeholders. Since 2000, Capstar has invested in a broad range of industries including media and broadcasting, healthcare services, e-commerce, financial services and real estate. Select recent investments include DMX Inc., which was recently sold to Mood Media, Andrew Harper, a high-end travel services company, Harden Healthcare, which was recently sold to Gentiva Health Services, Greenstream International, a global provider of reverse logistics for electronic devices, and Kendra Scott Design, a rapidly growing multi-channel jewelry company.

Capstar’s founder and Executive Chairman, Steve Hicks, also serves as Vice Chairman of the Board of Regents at The University of Texas System, and recently made a $25 million gift to advance UT Austin’s School of Social Work, which has been renamed in his honor.