Yamauchi is planning to gain some funds for GameCube and GameCube developers by selling off, and then repurchasing his 1.18 million shares of Nintendo stock. It's all about capital gains baby! Here's the skinny...

The president of video game giant Nintendo Co Ltd plans to use capital gains from the temporary sale of his 1.18 million Nintendo shares to set up a fund to promote game development firms, the Nihon Keizai Shimbun said.

The newspaper said Hiroshi Yamauchi, who owns 10.84 percent of Nintendo's outstanding shares, plans to sell his entire stake in the company in after-hours trading on Tuesday.

He then plans to buy back enough shares to maintain a 10 percent stake the following day, using the balance to help set up the 20 billion yen ($160.8 million) investment fund in January, the daily said on Tuesday.

The stock closed at 20,800 yen on Monday.

No one at Nintendo could be reached for immediate comment.

Money from the fund will be used to help start-up companies cover development costs, which are rapidly increasing as game consoles grow more sophisticated, the newspaper said.

Start-ups tapping into the fund will get collateral-free loans averaging one billion yen at interest rates matching the prime lending rates of major banks, the Nihon Keizai said.

Only firms that are working to develop games for Nintendo's new GameCube home game system and Game Boy Advance handheld console will be eligible to become recipients, it said.

Firms that receive financing from the fund must complete designated projects within a year, it said. Money will be made available to firms in Japan and overseas, it added.

Nintendo, the world's second-largest home video game maker, launched its Game Boy Advance handheld console in March. The new Game Cube debuted in Japan in September and in the United States this month.