Silver Lake, PIF have held recent talks to buy gaming software provider Unity

Silver Lake and Saudi Arabia’s Public Investment Fund have recently discussed acquiring Unity Software, the provider of tools for making video games and other interactive 3D applications. The investors reportedly considered valuing Unity at about $25 billion before its latest earnings lifted its market capitalization to roughly $21.5 billion. Unity has engaged an investment bank to assess its options, but the discussions may change and no transaction is assured. Silver Lake already owns about 8% of Unity, invested as much as $400 million in the company in 2017, and has a representative on its board; that director would typically recuse himself from sale deliberations.

A purchase would extend the investors’ gaming-industry activity after they joined the consortium that took Electronic Arts private for $55 billion in August. PIF, Silver Lake and other partners also own game developers using Unity’s technology, including Scopely and Niantic. Unity’s software powers thousands of games across mobile, console and PC, and is increasingly used in fields such as automotive design, film, architecture and industrial simulation. Its latest quarter showed revenue up 32% year over year to $622.1 million, with adjusted earnings of 44 cents per share. Growth in advertising and game-development businesses, including its AI-powered Vector advertising platform, helped Unity report its first quarterly GAAP profit since going public in 2020.