Thursday, November 6, 2008

IPL team Deccan Chargers' stake sale

The IPL bidding wars have begun. The first team on the block is Deccan Chargers with at least 10 firms, including a few media houses and some of the leading private equity funds in the race to acquire a majority stake in Hyderabad’s Deccan Chargers, the Indian Premier League (IPL) cricket team currently owned by the Deccan Chronicle group.

According to highly placed sources, KPMG, the advisors for Deccan Chronicle Group on the stake sale of Deccan Chargers, is currently in talks with at least 8-10 ‘interested parties’.

“There are a couple of leading media houses and some private equity funds (including some international funds) that have shown interest in Deccan Chargers. We should be closing the deal quickly,” a source close to the development said on conditions of anonymity.

The Hyderabad IPL cricket team has been on the block since last month after the Deccan Chronicle group acquired it earlier this year by paying $107 million (about Rs 502 crore) to the Board of Control for Cricket in India (BCCI).

Deccan Chargers is the second IPL team hunting for investors after Rajasthan Royals, which represents Jaipur and won the maiden tournament, has been on the lookout, sources said.

It might be a bit tough to sell the stake in Deccan Chargers in times of financial turmoil in the economy, however, sources in KPMG say that IPL, as a television property, generated high viewership ratings consistently between April and June and therefore has proved to be an event that attracts both viewers and advertisers.

“The fact that IPL ratings beat the ratings of several leading entertainment channels confirms that the format worked. Investors and all interested parties believe that there is a lot of return value in owning an IPL team,” a source close to negotiations with the potential investors said.

Deccan Chargers was the most expensive IPL team after Mumbai and Bangalore and the Deccan Chronicle group paid $107 million over ten years to the BCCI. Later, Group M, the leading advertising agency group, acquired 20 per cent in it, sources said.

The team spent over $5.88 million (Rs 28 crore) acquiring 11 players (both domestic and international). Australian all-rounder Andrew Symonds was one of the highest-paid IPL players, with a fee of $1,350,000, almost double Adam Gilchrist’s and over four times captain VVS Laxman’s earnings.

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