Rajasthan Royals' $1.63 billion buyout delayed on funding, legal hurdles

The proposed $1.63 billion buyout of Indian Premier League (IPL) franchise Rajasthan Royals has been delayed due to funding constraints within the lead investor group, regulatory uncertainties, and complexities related to the structure of the consortium of buyers, people familiar with the matter said.

The Somani-led consortium includes global investors such as Rob Walton, an heir to the Walmart fortune and principal owner of the NFL’s Denver Broncos, and Sheila Ford Hamp, principal owner of the NFL franchise Detroit Lions, along with her son Michael Hamp.

“The Kal Somani discussions are progressing, and we remain focused on ensuring a positive outcome for the franchise,” Royals Sports Group, a firm promoted by Rajasthan Royals co-owner Manoj Badale, said.

While the exact capital contribution of each member could not be independently ascertained, Somani is understood to be seeking a majority stake in the consortium, the person said. Apart from Badale, other shareholders in Rajasthan Royals include RedBird Capital and Lachlan Murdoch, among others. Somani is also an existing investor in Rajasthan Royals.

Raj Kundra Legal Dispute

Somani is in the process of raising capital to fund the transaction and has approached several large investment firms. However, he is yet to secure the required commitments, delaying the closure of the deal, according to one of the persons cited above.

Another factor contributing to the delay is unease among some consortium members on certain aspects of the transaction, including elements of the due diligence process, said people aware of the talks. The Board of Control for Cricket in India (BCCI) is understood to have raised the issue of fees on past secondary ownership transactions in the franchise, which is weighing on the deal, said people familiar with the matter. These transactions involve Mauritius-based EM Sporting Holdings, which controls Royal Multisport, the owner of Rajasthan Royals, they added.

Amid the delays, the franchise promoters are understood to have held discussions with other potential investors, including Lakshmi Mittal. His family, led by ArcelorMittal CEO Aditya Mittal, had participated in the earlier bidding process but did not emerge as the winning bidder. There is no certainty that these discussions will lead to a transaction.

Emails sent to Somani and Mittal remained unanswered till press time. The Mittals are understood to have placed a bid of around $1.5 billion in the earlier process, sources said.

These developments come amid an ongoing legal dispute involving former minority investor Raj Kundra. Through his investment vehicle, Kuki Investments, Kundra has approached the National Company Law Tribunal alleging oppression and mismanagement and seeking reinstatement of his 11.7% stake, according to court filings. The matter is currently pending adjudication.

Separately, a UK court granted an anti-suit injunction restraining Kundra from pursuing certain proceedings. This order is being challenged before the Bombay High Court. At a recent hearing, Justice Milind Jadhav observed that the challenge relates to an anti-suit injunction. The court noted that an arguable case had been made and issued notice to Emerging Media Ventures, the owner of Royals Sports Group.