Ares Management has reportedly held talks with Kolkata Knight Riders owners over a possible minority stake deal
The discussions come ahead of the IPL 2027 mini auction and could affect KKR’s ownership structure
The reported transaction centres on Jay Mehta-led Mehta Group and not a full change of control
KKR could be getting a new co-owner as Ares Management (a US based global alternative asset management firm) has reportedly been in discussions with the franchise owners around the enormous cricket market in India.
If KKR were to go down the route of partnering with Ares Management in the future it would be one of the big stories in Indian cricket.
According to a report by The State of Play, a weekly, subscriber-led online publication, discussions are taking place ahead of the IPL 2027 mini auction and could well see the ownership of the three-time champions change.
KKR are owned by Knight Riders Sports Private Ltd which is a joint venture between SRK's Red Chillies Entertainment, Juhi Chawla and the Mehta Group (backed by industrialist Jay Mehta).
Any deal in respect of one franchise is of course going to be of significance as the IPL has seen a huge influx of global investor interest since it started and a new stake sale in KKR would be part of that.
The reports are that the discussions are only with part of the existing ownership and not a full change of control. That puts KKR in a different bracket to some of the more recent IPL franchise deals and suggests a far more limited degree of ownership dilution if the discussions do in fact go ahead.
Ownership Structure Details
Knight Riders Sports Private Ltd is a joint venture between Red Chillies Entertainment (Shah Rukh Khan’s outfit), Juhi Chawla and the Mehta Group (Jay Mehta's industrialist group). It was set up in 2008 and is the holding company for the franchise.
The move reported is with the Mehta Group. If the reports are correct they are looking to sell a part of their ownership rather than exit completely.
A Moneycontrol report from mid-August put the proposed sale at circa 20% of the Mehta Group’s stake, at a premium valuation of $1.8bn.
The report notes that this was a valuation as a target and not the final agreed figure.
Deal Status And Scope
The discussions are still very much in the air. Since the August report there has been nothing of significance in the public domain and no official confirmation, which would suggest that a deal is actually in place.
It will be very interesting to see whether and when a deal actually gets done when both sides come together to finalise it, or indeed if any deal gets done in the future.
Recent IPL transactions have provided the context. There seems to be increased interest from overseas investors in the stake sales in RCB and the Rajasthan Royals, but the KKR case is different as it's a case of very minor dilution.
The RCB and RR deals were majority stake sales. In the case of KKR though, it’s only one of the co-owners (the Mehta Group led by Jay Mehta) who is planning to offload a minority stake and unlock value.
Talks have been had with Ares Management in this regard but no call has yet been made. Ownership is split. 55% of the venture is Red Chillies Entertainment and the remaining 45% is with the Mehta Group.
