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Why did PE fund CVC Capital buy an IPL team?

Why did PE fund CVC Capital buy an IPL team?

On 25 October 2021, the Indian Premier League (IPL) added two new teams to its list of franchises. With the addition of 2 new teams, the number of total teams reached 10. BCCI has brought in F12,690 crores from this auction.

This auction has witnessed something new which was never seen before in the world of cricket. CVC Capital, a global top-tier Private Equity (PE) firm has bid and won a franchise in IPL. CVC Capital has won the bid for the Ahmedabad franchise with their winning bid of t5,625 cores.

Luxembourg-based 40 years old CVC Capital is not new to the world of sports. The PE firm has an interest in football, rugby, tennis, and formula 1. CVC Partner has recently invested $2.25 Billion in the Spanish football league La Liga at a valuation of $22.5 Billion.

CVC Capital’s interest in sports goes back to 2006. In the year 2006, CVC Capital invested $925 million in Formula 1. The PE firm made a highly successful exit with $6.7 Billion in 2017. The PE firm earned 7x return in their initial investment in little more than 10 years.

Cricket is getting popular all over the world. IPL is the biggest and most popular cricket league in the world. This attracted the $111 Billion PE fund to invest in IPL. India Cements bought the CSK franchise in 2008 for just $91 million. Today, CSK is valued at close to $1 Billion. CVC Capital is also expecting a high-profile exit from their new franchise in the coming decade.

The winning bid of CVC Capital soon attracted controversy. There are reports about CVC Capital allegedly owning a stake in two betting companies Tipico and Sisal. Questions were asked why the BCCI allowed a company with interest in betting to own an IPL team. In January 2022, BCCI’s legal team cleared the name of the CVC Capital after a high-level investigation.

The entry of CVC Capital in IPL has further strengthened the brand value and appeal of IPL. We may see more PE firms and Investors investing in IPL in the coming years. This will help in making IPL one of the biggest sports leagues in the world.

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