Silver Lake wins approval for New Zealand rugby deal
Silver Lake has won approval for a NZD 200m (USD 134m) investment in the commercial arm of New Zealand rugby, reflecting a recent upswing in global private equity involvement in sport in Asia.
The deal, positioned as a partnership between Silver Lake, the New Zealand Rugby (NZR) Board and the New Zealand Rugby Players Association (NZRPA), values the commercial entity at NZD 3.5bn. The private equity firm is subscribing to a perpetual convertible security at a low interest rate, which will convert into ordinary equity after three years.
Silver Lake’s initially proposed to acquire a 10-15% stake for a reported USD 340m, which was opposed by NZRPA. It will invest NZD 200-300m for 5.71-8.58%, depending on the outcome of a NZD 100m co-investment opportunity to be offered to New Zealand-based institutional investors. Silver Lake will underwrite this institutional syndication if it is not fully subscribed.
NZR said the higher valuation compared to the initial proposal was driven by an improvement in its financial outlook in terms of broadcasting and sponsorship revenue. The sport was severely disrupted by COVID-19, including the international-level Rugby Championship and club-level Super Rugby tournament, which are run by NZR and its peers in Australia, South Africa, and Argentina.
The 2020 Rugby Championship took place in Australia, in front of smaller-than-normal crowds and without South Africa, the world champions. They returned for the 2021 event but have since expressed a desire to join Europe’s Six Nations from 2025. Super Rugby 2020 was cut short and resumed in 2021 without the South African franchises, which now compete in a European league.
World Rugby, the governing body for the sport globally, is currently negotiating an overhaul of the global fixture list with a view to creating a biennial world competition.
CVC Capital Partners holds an interest in this process, having acquired minority stakes in the bodies that run domestic rugby leagues in England, Ireland, Scotland, and Wales. Last year, it agreed to pay GBP 365m (USD 497m) for a one-seventh share of Six Nations Rugby, working alongside the rugby unions of England, France, Ireland, Italy, Scotland, and Wales.
Around the same time, Rugby Australia said it would consider private equity investment proposals.
Silver Lake is already a significant investor in sport. Last December, it acquired 33.3% of the commercial unit for professional football in Australia at a valuation of USD 300m. Outside Asia, Silver Lake is an investor in City Football Group, the parent of English Premier League side Manchester City, and owns Endeavor, controller of the Ultimate Fighting Championship mixed martial arts series.
CVC’s sports portfolio, which includes the commercial rights holders for global volleyball and Spanish football, as well as rugby, is also expanding into Asia. The private equity firm paid INR 56.2bn (USD 739m) for one of two new franchises in the IPL, India’s marquee cricket league. This followed an investment by RedBird Capital Partners – another big investor in sport – in an existing franchise.
Silver Lake’s investment in New Zealand is intended to support the sport at all levels, the development of new capabilities, and the pursuit of opportunities enabled by digital technologies. It also includes the establishment of an investment entity with NZR and NZRPA that will target rugby-related businesses outside of New Zealand.
“This is a pivotal moment for rugby in New Zealand. The agreement provides capital on a sound economic basis and Silver Lake brings additional capability to execute on the new growth opportunities. The proposed investment by New Zealand institutions provides an opportunity and natural pathway for New Zealanders to share in the growth of rugby over time,” David Kirk, NZRPA chairman, said in a statement.
Stephen Evans, a managing director at Silver Lake, added: “Digital technologies are transforming all sports, and we look forward to bringing our global network and resources to help New Zealand rugby drive innovation and take advantage of all the opportunities ahead.”
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