Deccan Chargers—the Hyderabad franchisee of the Indian Premier League (IPL)—is learnt to be in final stages of discussions with KKR, the New York-based PE fund, for divesting a significant minority stake. It is leant that KKR has submitted a term sheet for picking about 47% stake in the team at a pre-money valuation of $20 million (Rs 100 crore).
Deccan Chargers is promoted by a Hyderabad-based media group. An email sent to Deccan Chargers CEO Tim Wright did not elicit a response. Repeated attempts to contact him on his mobile also failed.
It is leant that while an investment banker has been appointed by the company to find suitors, KKR is the only fund that has submitted a term sheet to the company. If accepted by Deccan Chronicle, it will be the first instance of an IPL team getting PE investment. This will also be the first instance of an Indian team in any sport getting PE funds. Globally, Och Ziff owns a significant stake in Manchester United.
Though Deccan Chargers has posted losses in the first season of IPL, it is learnt that the fund expects the team to breakeven in two years. Deccan Chronicle, the Hyderabad-based media group had bought franchise rights of the team at $117 million. These franchise rights have to be paid over a 10-year period and so far Deccan Chargers has only paid the first installment of $11.7 million.
Deccan Chargers has a strong line up of players including Adam Gilchrist, Andrew Symonds, Scott Styris, Herschelle Gibbs, Shahid Afridi, RP Singh, Chaminda Vaas and Nuwan Zoysa. While it was one of the pre-tournament favourites, it did not do well in the first IPL and has replaced VVS Laxman with Gilchrist as its captain for the next season.
KKR’s last investment in India was $700-million acquisition of Gurgaon-based IT company Flextronics Software Systems (now called Aricent Technologies). Several IPL team owners have been scouting for funds and are in talks with PE players. The winner of the first edition of IPL, Rajasthan Royals, is also scouting for funds as is the Ness Wadia and Preity Zinta-owned Kings XI Punjab.
Source : Economic Times