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Dream11 Looks To Raise $235 Mn In Fresh Funding; Tencent’s Share May Come Down

Dream11 Looks To Raise $235 Mn In Fresh Funding; Tencent’s Share May Come Down

Dream11 is looking to raise $235 Mn in fresh funding from at least four private equity firms

TPG Capital, Tiger Global Management and Steadview Capital are looking to buy a stake in Dream11

Dream11 has won the title sponsorship rights for the IPL this year, with its bid of INR 222 Cr

Indian fantasy sports platform Dream11, which recently won the title sponsorship rights for the cash-rich Indian Premier League’s (IPL) 2020 edition, is reportedly looking to raise a fresh round of funds from at least four private equity firms. Sources privy to the matter told The Indian Express that the deal is worth $235 Mn, with a $35 Mn primary fund and a $200 Mn worth secondary sale of shares. 

If the deal comes through, the shares of Chinese multinational conglomerate Tencent Holdings in the company could fall to a single digit. Reportedly, Tencent currently holds 10.9% shares in Dream11’s holding company Sporta Technologies Pvt Ltd. Further, the deal could see Dream11’s valuation increase to $2.5 Bn, from the $1.1 Bn it reportedly had in April 2019, when Steadview Capital bought stakes from the company’s early investors. 

Dream11’s Chinese links have come under fire after it was awarded the title sponsorship rights for the IPL earlier this week. Dream11 won the rights with a reported bid of INR 222 Cr, after the league’s previous sponsor, Chinese technology company Vivo, which had signed a five-year contract for title sponsorship in 2017, opted out for this year amid growing anti-China sentiment in India. According to Vivo’s contract, the company paid the Board of Control for Cricket in India (BCCI) INR 440 Cr every year for the league’s title sponsorship. However, the present deal with Dream11 comes at half the price, for a period ending December 31, 2020. 

BCCI Awards IPL Sponsorship To Tencent-Backed Dream11 Over Unacademy

In the form, ‘Invitations For Expressions Of Interest (IEOI) For IPL Title Sponsorship Rights’ released by the IPL on August 10, it was stated that BCCI wouldn’t be obliged to award the title sponsorship rights to the highest bidder. “BCCI’s decision in this regard will also depend on a number of other relevant factors, including but not limited to, the manner in which the third party intends to exploit the Rights and the potential impact of the same on brand IPL as also the fan/ viewer experience, which will be examined/ evaluated by BCCI in the course of discussions/ negotiations with interested third parties who submit an EOI,” the document had stated. It is unclear why the BCCI decided to award the title sponsorship rights to the highest bidder, Dream11, with its Chinese investors, given the prevalent anti-China sentiment which even prompted previous sponsor Vivo to pull out of the league this year. Indian edtech company Unacademy was also in the fray and was reportedly the second-highest bidder at INR 201 Cr. Bengaluru-headquartered Unacademy has no Chinese investors.

The private equity firms that are reportedly planning to buy a stake in Dream11 include TPG Capital, Tiger Global Management and Footpath Ventures, among others. Dream11’s most recent investors are Steadview Capital and Tencent Holdings. The company was founded in 2008 by Bhavit Seth and Harsh Jain.

Jain is the son of Anand Jain, a senior executive at Reliance Group and Jai Corp Ltd chairman.

Dream11 claims to have 80 Mn users on its platform. According to the 2019 annual report of Dream11, the latest available report, the gaming firm’s revenue from operations increased to INR 775 Cr from INR 224 Cr in the financial year 2018. Its losses widened to INR 131 Cr from INR 65 Cr a year ago. 

Besides being the title sponsor for the IPL, Dream11 has also been the league’s official partner since last year. The platform, which runs fantasy leagues for various sports, is also associated with the Hero Indian Super League, the VIVO Pro Kabaddi League, T20 Mumbai League and Redmi Karnataka Premier League, among others.