ISIS Equity Partners is suitor for Kings XI

Sunday Guardian

Yes, the first IPL franchise is ready to bite the dust. A top of theline Delhi based legal firm has been mandated by the Kings XI Punjabpromoters KPH Dream Cricket Pvt Ltd to find a buyer for the embattledIPL Mohali franchise which is facing queries on the tax and routing ofinvestments front. While it is cooperating with BCCI and Department ofIncome Tax to resolve all issues, it is parallely driving its saleprocess forward. Sources close to developments have revealed to SundayGuardian that the deal price has been finalised at approximately $300million, which is four times the price at which the franchise waspruchased in 2008 by Dabur's Mohit Burman, Bombay Dyeing's Ness Wadia,Apeejay Surendra's Karan Paul and actress Preity Zinta. A duediligence process is underway and the sale is likely to be concludedshortly.
It is believed that ISIS Equity Partners which is one of the UK’sleading mid-market private equity investors is the suitor for thefranchise. ISIS is reportedly partnering a corporate in thisacquisition. Typically, ISIS invests in transactions of between £5mand £75m in value in companies with profits in excess of £1m. Fundsare investedon behalf of both retail (Baronsmead VCTs) and institutional clients.Mohit Burman who is the majority shareholder in Kings XI confirmedthat ISIS Equity is someone with whom Kings is in anadvanced stage of dialogue. He refused to confirm the other entity dueto a confidentiality agreement.
Co owner Mohit Burman categorically told Sunday Guardian that thebuyer is neither Hero Honda's Pawan Munjal or Videocon's VenugopalDhoot who to his chargin found that his bid was trumped by Rendezvousand Sahara in the two teamauction held recently. While the modalities of the sale are still notknown, it iscertain that the price may be a consideration now that the fur isflying after the investigation being conducted by ED and IT sleuths.Earlier it was reported that Pawan Munjal was paying $260 million forthe city based franchise but this was vehemently denied by bothparties.
The exact shareholding of KPH Dream Cricket Pvt Ltd is:
MB Finmart (new name of Dabur Investment Corp) 2,23,850 sharesNess Wadia JMD Bombay Dyeing 4,47,700 sharesPreity Zinta4,47,700 sharesKaran Paul Chm Apeejay Surendra Group 77,861 sharesWindy Investment2,23,850 sharesRoot Investment 79,600 sharesColway Investments4,47,700 shares
Since both Windy and Colway share office space with MB Finmart andother Dabur group promoter owned entities. It is clear from theshareholding pattern that Mohit Burman is the majority shareholder inthe franchise. At a purchase price of $76 million, the selling priceof $300 million offers a huge premium, the valuation being 4x. Eachone of the four promoters is expected to make handsome returns ontheiroriginal investment. Burman is known as an investor who flips hisinvestments for a good profit - he did this with some like PunjabTractors and reportedly Vishal Mega Mart while in others like Aviva,Centurion Bank, Bongrain, Amforge Industries he remains invested.Earlier this year, he was part of a Burman family initiative to launcha $200 million healthcare and life sciences fund. Asia Healthcare Fundhas the Burmans as anchor investors. Some of Mohit Burman'sinvestments have been through vehicles like Elephant Capital listed onLSE AIM and in the past have been wide and varied:
*Aviva India, one of the leading life insurance players in India withits products available at over 370 locations and a sales force of over9,500 individuals. Following the liberalisation of the insurancesector in 2000, Mohit and his team gained one of a limited number oflicences and entered into a joint venture in 2002 with the AvivaGroup, one of the world’s largest insurance groups. The Burman familyhave invested over $75 million in the venture and own approximately 74per cent. of the business.• Vishal Retail, one of India’s leading retailers with a chain of 26stores and strategically positioned as a “value for money” destinationtargeting the fast growing middle class consumer.• Fidelity Fund Management India Private Limited (“Fidelity India”).Fidelity established its direct presence in the Indian market bysetting up Fidelity India in 2004 as a joint venture with the Burmanfamily. Fidelity India now has multiple funds. India is now the secondlargest country for Fidelity in terms of numbers of employees. Thecompany has offices in Mumbai and Delhi, with investment professionalsbased in each. The Burman family holds 25 per cent. of FidelityIndia. This investment was brought to the Burman family through theircontacts in Fidelity UK.• The Lord Krishna Bank (“LKB”) was started in 1940 in Kerala by agroup of entrepreneurs. Today it has grown rapidly in size and scope,from a local to a national bank and a network of 111 branches across11 states. TheBurman family has invested Rs.48.3 million in LKB, resulting in a 6.6per cent. holding.• ABN AMRO Securities (India) Private Limited, a joint venture betweenthe Burman family and ABN AMRO Bank, providing equity and debtsecurities services.
There is likely to be some debt on the books as well, but since thefinancials of IPL teams are not very transparent, this figure cannotbe quantified. As per the IPL conditionalities, none of the eightoriginal franchise owners could exit from their clubs - effectively 51per cent - till the end of season 3. While Kings XI reached the semifinals in season 1 losing to Chennai Super Kings, season two saw themwinning seven and losing seven. However, season 3 was anunmitigated disaster with the club losing six of its first seven games.
Mired in controversy from the beginning, Kings XI has been more famousfor its off field news flow - a racism row over two of thecheerleaders, followed by an unsavoury dispute between Ness Wadia andPunjab Police, then the infamous slapgate involving Sreesanth andfinally this year the use of the Bhagat Singh's name in anadvertisement created a huge controversy. With Bhagat Singh's kinthreatening to sue Kings XI for use of the freedom struggle martyr'sname in an advertisement, it created a furore in Punjab.