With its exclusivity window to negotiate a deal to buy a stake in the commercial rights of the SA Rugby Union (Saru) now over, US private equity firm Ackerley Sports Group (ASG) says it will not walk away from the deal.
ASG’s $75m bid to buy a 20% stake in Saru Commercial Rights Company (CRC) was last month voted down by the majority of Saru’s unions.
Chris and Ted Ackerley, the brains behind ASG, said in a statement on Monday that they were disappointed by the vote. The Ackerleys met unions ahead of the December 6 vote and had agreed in principle to include up to 50% SA investment in the transaction, they said in the statement. They also agreed to incorporate the unions’ demands into the deal terms.
“Despite the opposing vote, ASG remains confident that its strategic value creation plan should and will be part of any new proposal to create financial stability for Saru and its members while it elevates SA Rugby to a place of financial strength in both the short and long term,” they said. “In the coming month, ASG will continue to participate in Saru’s process to secure a world-class financial syndicate by deepening and expanding its own team.”
ASG said it intended to engage any approved SA consortium and to work with a professional adviser to ensure that any future plan was effective and took the needs of the member unions into account.
“These additions will provide an even stronger engine to the already impactful strategic investment we have developed over the past 15 months.”
Saru president Mark Alexander in December warned of the sport’s demise in the country if its revenue structure was not overhauled and an equity partner found. Alexander told MPs that an equity partner would help to diversify the union’s revenue base. He said the union had opted for a partner with international expertise because of the dire need for a cash injection to sustain the sport. Saru had reached a local sponsorship ceiling and growth lay offshore where ASG had expertise.
ASG was seeking a 20% stake in Saru’s commercial rights company in return for $75m and control of its board.
The board will comprise three members each from Saru and ASG — with the latter having the right to appoint an “independent” chair.
Under ASG’s failed offer, $35m would be paid on signing the deal and the remainder over four years. However, the capital must be repaid to ASG. One criticism of the proposed deal was that it amounted to a loan while ASG would have full participation rights.
Meanwhile, a consortium made up of AltVest Capital, EasyEquities, 27four Investment Managers and RainFin has launched an audacious bid to buy up to 40% of Saru’s commercial rights, which includes its crown jewels, the Springboks. In a letter sent to Alexander and Saru CEO Rian Oberholzer, the consortium expressed its interest in buying up to 40% of the commercial rights, housed in an outfit called Saru CRC.
The consortium has proposed a “transformative and inclusive partnership model to acquire a significant [estimated 20%-40%] equity stake” in the commercial rights. It has put up $375m for the stake.
“This approach aligns external stakeholders with the success of SA Rugby while providing the necessary capital,” said Warren Wheatley, CEO of Altvest Capital on behalf of the consortium. “Despite external investment, Saru will maintain a controlling stake of 60%-80%, ensuring governance, decision-making authority and strategic oversight remain within the organisation,” he said.
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