Ahmedabad-based Torrent Group has reached an understanding with European private equity major CVC Capital Partners to acquire a majority stake in the Indian Premier League (IPL) franchise Gujarat Titans after the ownership lock-in period ends in February 2025, according to sources with direct knowledge of the development.
Gautam Adani-promoted Adani Group, which was also in the running to buy Gujarat Titans, is believed to have stepped back from the race, the sources added.
“Torrent and CVC have a gentleman’s agreement in place for the Gujarat Titans since a formal deal can only be signed after the lock-in period ends,” one of the sources said on condition of anonymity.
While Torrent Group is likely to acquire a majority stake in Gujarat Titans, CVC could retain a significant minority stake in the franchise, the sources added.
According to them, Gujarat Titans has been valued at over $1 billion, reflecting the growth in the cash-rich league’s media rights and sponsorship income.
Another source said the Adani Group might have backed out from the race due to the high price-tag of Gujarat Titans and the fact that the group is focussing on its core businesses, which include power and ports.
Both Adani and Torrent had unsuccessfully bid to acquire IPL’s Ahmedabad franchise in 2021. Adani Group and Torrent had placed bids of Rs 5,100 crore and Rs 4,653 crore, respectively, for the Ahmedabad franchise.
CVC, which has investments in LaLiga, Premiership Rugby and Volleyball World, had pipped the two companies to acquire the franchise for Rs 5,625 crore in 2021.
CVC Capital Partners, Torrent Group and Adani Group declined to comment.
The Board of Control for Cricket in India (BCCI) will generate Rs 50,000 crore revenue from media rights and sponsorships between 2023 and 2027. Media rights and sponsorships collectively comprise the central revenue pool.
IPL franchises generate a lion’s share of their revenue from the BCCI’s central revenue pool, which is equally split between the board and the franchises. In FY24, the revenue of IPL franchises more than doubled to Rs 600-700 crore on the back of a bump up in the central revenue pool.
“M&A deals usually happen on revenue or profit multiples; however, the IPL valuation is more about vanity since the demand is huge while supply is negligible,” said another source on condition of anonymity.
Most IPL franchise owners are unwilling to sell majority stakes, which acts as a deterrent for large investors from investing in the league. Some of the IPL owners include Mukesh Ambani’s Reliance Industries, Diageo Group’s United Spirits, Bollywood star Shah Rukh Khan, Sun TV Network and RP-Sanjiv Goenka Group.
Franchises require BCCI clearance for equity sales.
Recently, Punjab Kings co-owner Mohit Burman’s plan to sell an 11.5% stake to an external investor got scuttled after Bollywood actor Preity Zinta challenged the decision in court.
Apart from Burman and Zinta, the other co-owners of the franchise include Britannia’s Ness Wadia and Apeejay Surrendra Group’s Karan Paul.
Torrent Group, which has interests in power and pharma, has a market capitalisation of almost Rs 2 lakh crore. Adani Enterprises, the flagship arm of Adani Group, has a market cap of Rs 3.39 lakh crore.
The two companies have set up separate arms for investments in sports. Adani Sportsline owns teams in the Women’s Premier League, kabaddi, kho-kho and International League T20. Torrent Group had incorporated Torrent Sports Ventures just ahead of the auction of two new IPL teams in October 2021.
Gujarat Titans is owned by CVC-promoted Irelia Sports India, which had reported a net loss of Rs 429 crore on revenue of Rs 359 crore in FY23. The company, which is yet to file its FY24 financials, is expected to double its revenue due to the higher revenue from the central pool.
The IPL’s business enterprise value was recently marked down by 11.7% to $9.9 billion by consulting firm D and P Advisory due to reassessment of media rights value in light of consolidation in the media industry.
In June, American investment bank Houlihan Lokey valued IPL at $16.4 billion, up by 6.5%, reflecting the continued strength and global appeal of the league.
Source: Economic Times