IPL franchise valuations surge after RCB Rs 16,660-crore deal

Mumbai: Shares of companies that own Indian Premier League (IPL) teams surged up to 20% on Wednesday after Royal Challengers Bangalore (RCB) got new owners in a ₹16,660-crore deal, boosting the market value of other teams in the world's richest cricketing property that has surged about 25 times since the first edition in 2008.

Aditya Birla Group, The Times of India (publishers of The Economic Times), Bolt Ventures and a Blackstone fund, acting in a consortium, acquired current champions RCB for $1.78 billion. United Spirits, a subsidiary of Diageo, exited the franchise.

RPSG Ventures, which owns Lucknow Super Giants, surged 20% on Wednesday to its highest daily tradable limit, while Sun TV Network that owns a stake in Sunrisers Hyderabad gained as much as 5.4% during the day before closing lower.


"United Spirits exited RCB, which is a non-core asset, at a higher valuation and the stake sale is being perceived as a value unlock and capital allocation to the core business of the company," said Bhavik Joshi, business head at INVasset PMS.

"The gains could sustain in the near term," he said.

Rajasthan Royals, among the cheapest franchises sold at $67 million in 2008, has seen its value jump nearly 25 times to $1.63 billion (₹15,501 crore). Entrepreneur Kal Somani, supported by Rob Walton of Walmart and the Hamp family of Ford Motor, both of whom own franchises in the US National Football League (NFL), are the new owners of the franchise.

This deal marks the entry of global sports franchise owners into Indian cricket. Nuvama Institutional Equities said that the RCB deal implies more than 2 times valuation for Gujarat Titans at $900 million and above Rajasthan Royals's recent $1.6 billion valuation.

The brokerage said that it reflects a sharp re-rating of IPL assets, with franchise value increasing around 25 times since inception in 2008, supported by strong global investor interest from private equity and US sports owners.

"It sets a strong valuation benchmark for IPL franchises, implying potential upside for other listed franchise owners such as SUN TV (SRH) and RPSG Ventures (LSG)," said analysts at the brokerage in a note.