Xiaomi invests $20 million in Kingsoft-owned online gaming company

Chinese software company Kingsoft (HKG:3888) announced today it will sell $20 million worth of shares of its subsidiary Westhouse to Chinese smartphone maker Xiaomi.

Xiaomi will take a 4.7 percent stake in Chinese online game developer Westhouse. It’s unclear what exactly the strategic investment aims to accomplish. Xiaomi is mainly a mobile company, but Westhouse only makes PC-based MMOs. It has six titles in total, the most popular being Jian Wang 3. Kingsoft and its other subsidiaries, however, are responsible for several mobile games for both smartphones and tablets.

According to the announcement:

Westhouse Group and Xiaomi will further explore the opportunity of cooperation in the area of mobile games. Whereby Xiaomi would be a strategic distribution partner of Westhouse Group’s mobile games.

The deal could put heavy pressure on Westhouse to tranform into a mobile-first gaming company.

Sina Tech reports Westhouse is now valued at $400 million.

This isn’t Xiaomi’s first investment in Kingsoft. In late 2012, the smartphone maker bought a nearly 10 percent stake of Kingsoft’s cloud computing unit.

Xiaomi founder Lei Jun worked at Kingsoft for 15 years – much of that in the CEO position – prior to starting his own company.

(Hat-tip to Sina Tech)

(Editing by Josh Horwitz)