RPSG Ventures - A proxy IT play and an emerging FMCG company

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@Chins - certainly back to the investment board.

But I will just try and add some colour on this basis what I have checked up in the meanwhile (also repeating here some data already shared above by other members):-

  1. The 7000 Cr is a headline number, and has to be paid out over a period of 10 years. Posts above have also pointed out, plus quotes in the media from Sanjiv Goenka, are pointing to a net present value of 2100-2500 Cr. That said, I have not done any calculation on this, we need to figure out the right discounting for the NPV and probably estimate the actual net present value. At 2100-2500 Cr if fair, this could be a reasonable investment, but I have a feeling the number would be higher - in case any valuation experts can help with this.

  2. On a TV interview, Sanjiv Goenka states that the outgo from the RPSG business should be ~200 Cr in year 1. Interview has several interesting details, posting it here

RP Sanjiv Goenka Group Bags Franchise For Lucknow IPL Team | Newsmaker | CNBC TV18 - YouTube

  1. The track record of CVC is quite decent with past acquisitions (F1, La Liga recently), and they have been buyers as well in this auction. Came across an interesting article on how they did very well on F1. That said, we are all aware how investments can be so different Meet the biggest winner in the history of Formula One: CVC Capital Partners | Private equity | The Guardian

  2. The Glazers are finance hawks (and I hugely dislike them as a football fan). But even they bid 4k Cr+

That said, it does bring forth our initial concerns:-

  1. This for me does seem like a ‘status’ buy, a much more adverse version of Mohun Bagan. Again does not please me at all as a shareholder.

  2. Bids by other franchisees show that they could have underbid this (even the Adani’s bid 5100 Cr for Ahmedabad!)

  3. I find it incredible that a new IPL team can sell for so much versus a premier league team like Newcastle! But again, is that present value or deal value?

The initial thesis with regard to FSL holding company discount and potential of group companies still stays, but this does bring forth serious questions for me. That said, after listening to the interview - my initial shock at the amount of the transaction has slightly subsided. But that still has to be validated.

Discl : Invested, monitoring

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