Soon you will not only be following your IPL teams’ score but also tracking your favorite IPL teams’ stock price also. That should make things interesting for those who are interested in cricket and the stock markets.
Where there is money there are money managers. Financial whizkids - whether from private equity (PE), investment banking or even conventional banking - are keeping close tabs on IPL. With IPL already worth close to $2 billion and teams needing to fork out close to Rs 600 crore every year combined, they are restless for a piece of the action.
Most PE funds target 25-30% annual returns, irrespective of which way the stock market goes. Given the fanatical following cricket gets in India and the possibility that the league will be even bigger next year, the game, they believe, offers as a good an opportunity as the corporate world if not better. While they’re proceeding with caution, they’re clear it is important to open their account in this game early. IPL is a good fit for PE firms given that they tend to favour businesses that cater to a large mass of consumers.
IPL matches, with their huge eyeball count, will surely encourage private equity investors to invest in its clubs. We could see some action in the next season itself as most promoters (of IPL clubs) are not really against divesting a portion of equity stake in their teams.”
Also, given the huge sums they are forking out for licences, players’ salaries and the marketing blitzkrieg, many of the eight franchisees could end up requiring large amounts of capital. While some of the biggies like Mukesh Ambani and Vijay Mallya could fund the teams they own through their listed entities, the others could end up taking the private equity route. As per reports, the UK-based early stage investor Blenheim Chalcot has already invested in the Jaipur-based Rajasthan Royals.
A private equity investor normally invests in pre-IPO companies, tending to them for two to 10 years, before cashing out when the company goes public.
The most important factor for PE investors usually is exit route. How do they get their money out, that is the question. At present most PE investors, while keen on investing in the IPL T20 Cricket are trying to figure out their exit route.
Bankers are coming up with their own ideas on how they can get business from the Indian Premier League. Yes Bank is one of the more aggressive in this space, and is already in talks with a couple of teams. According to Karan Ahluwalia, head, media and entertainment at Yes Bank: “We are interested in the sports banking business and the IPL format, which has been well orchestrated by the BCCI, is indeed a business opportunity.”
With listed entities getting into the business of cricket, analysts tracking them are being forced to keep an eye on the sports investments of these entities as well. India Cements, Deccan Chronicle, United Breweries and Reliance Industries are all listed entities. Alchemy, a broking outfit, has already valued the Chennai Super Kings separately, from its listed parent India Cements. They estimate that the Super Kings are worth Rs 20 per share, giving it a valuation of around Rs 600 crore.
Globally, football clubs like Manchester United have listed on the stock exchange, but it seems at least in the IPL case, listing is not a near-term possibility. “Listing an IPL team on the bourses (like some of the English Premier League clubs) is a long call; one should not forget, the IPL is not a continuous business, and lasts for on |
