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Sahara in talks with two banks to fund Pune franchise

Sahara in talks with two banks to fund Pune franchise
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First Published: Mon, Mar 22 2010. 10 52 PM IST

Batting for IPL: Sahara group chairman and managing worker Subrata Roy says the firm can also go for an IPO to raise funds. Abhijit Bhatlekar / Mint
Batting for IPL: Sahara group chairman and managing worker Subrata Roy says the firm can also go for an IPO to raise funds. Abhijit Bhatlekar / Mint
Updated: Mon, Mar 22 2010. 10 52 PM IST
Mumbai: Sahara group is in talks with two banks to tie up funds for securing the Pune franchise in the Indian Premier League (IPL), chairman and managing worker Subrata Roy said in an interview. Sahara Adventure Sports, a group unit, bid $370 million (Rs1,683.5 crore) for the franchise, one of the two that will join the Twenty20 cricket tournament next year. “We have been approached by UK-based clubs, Indian companies for partnerships,” Roy said, adding that it could also opt for an initial public offering (IPO) if bank funding or partnerships do not materialize. Edited excerpts:
Batting for IPL: Sahara group chairman and managing worker Subrata Roy says the firm can also go for an IPO to raise funds. Abhijit Bhatlekar / Mint
What drove you towards this aggressive valuation? How are you working on your returns on investments?
On the valuations, one has to understand the grand success of IPL. When it started, even a valuation of $100 million-plus—it was said—was very high, and now valuations of eight existing teams have gone (up) three-four times within two tournaments. So today one has to understand the real valuation of the team in IPL...
How are you going to be funding this?
We are in talks with two banks and they are working on that. They would come out with their conclusion and their decision by tomorrow. They want to fund the entire IPL thing with Sahara, but if it’s not done, it would be internal accruals only.
Will you also be looking at offloading some stake at a certain point in time to someone else who would be interested in the Pune team?
Within 24 hours we have got offers from some UK clubs and Indian companies also, but we have not thought on this. We can offload in two cases. One, the company or club, which is coming, is a good organization. Second, what their financial proposal will be—these two factors will be open in our mind. But if these two are not exciting we would not like to dilute (the stake) at this stage at least.
What is happening is that from the first year only the operational profit is there. We are paying advance for 10 years to own a property, so the entire amount can be amortized. So what we are thinking, since the operational profit is positive, we can go for an IPO also, may be after a year or two.
So you are saying within the year or next perhaps two years, we could look at an IPO as far as the Pune IPL team is concerned?
There are three things. One, the banks are very eager to come with us. Two, there are companies and clubs from the European countries who want to join us. Three, we can also take care of the internal accruals. Also, if we are not joining hands with anyone or not diluting any share, then we can go for an IPO and go to the retail market.
Has there been any thinking on the team composition because that is going to be another ball game altogether. So any thoughts or ideas on the team composition?
It is very difficult to say at this stage. There are certain rules that every existing team can retain three best players, but as I have been told that players are objecting to this rule—they want to have the liberty to change the teams also—and BCCI (Board of Control for Cricket in India) is thinking on this. So formation of team would depend on this also and there are so many other factors which cannot be disclosed at this stage...
One would imagine your heart would have been in the Lucknow team as opposed to the Pune team. Are you sad about the fact that eventually it turned out to be Pune and not Lucknow as far as you are concerned? (Sahara Group is headquartered in Lucknow.)
That is a very emotional point, but yes. We always wanted to go for Kanpur. Lucknow has a very small stadium, and that (Kanpur) was our obvious choice.
But some IPL people and so many other people there told us rightly that during IPL matches the players run from one point to another on almost all days. So there should be good air services, and connectivity is very important for IPL, which is not there in Kanpur... Pune is coming out with a very good stadium, which is going to be one of the best in the world, they say. So that is also a plus point and there is another factor—Aamby Valley (a township being developed by Sahara Group) is very near to Pune.
We have made the airport and air service is there. So it is 15 minutes’ flying from Aamby Valley to Pune. So that is also a major factor which helped us decide for Pune.
cnbctv18@livemint.com
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First Published: Mon, Mar 22 2010. 10 52 PM IST