Knight Riders Sports Pvt Ltd, the Shah Rukh Khan-Jay Mehta owned company that owns the Kolkata Knight Riders (KKR) Indian Premier League (IPL) team, is open to a strategic investor coming in. The company is also in advanced talks with a number of firms for merchandising deals to take Brand KKR pan-India.
Venky Mysore, CEO and managing director of Knight Riders told Entrepreneur magazine, a part of Network18, in an exclusive interview that the firm was “absolutely open” to bringing in a strategic investor who would add value to the overall gameplan of the company.
“More than a private equity firm, it’s a strategic investor which will make sense. We are not looking, but if someone comes along, we are absolutely open. To the extent that I have already prepared the shareholders about it.”
The shareholders – Shah Rukh Khan and wife Gauri (55 percent) and Jay and Juhi Mehta (45 percent) are currently a delighted lot, since their big move of separating ownership from management and corporatizing the franchise totally has reaped rich dividends.
KKR won the fifth edition of IPL earlier this year, defeating holders Chennai Super Kings in the latter’s home territory, Chennai. Shah Rukh Khan and Jay Mehta are, according to Mysore, totally hands-off owners who allow complete freedom to the management team to run the franchise.
KKR is set to wipe out all its accumulated losses by next year and break even in FY13. It ended FY12 with a Rs 14 crore net profit and revenues stand at around Rs 125 crore, Mysore said. “Fast forward to FY13 and we expect to wipe out the accumulated losses completely and turn profitable.” He said though there was no benchmark yet on valuation, he reckoned the value would be 15 times revenues.
Buoyed by the current performance rate, Mysore says he hopes to clock a 25 percent compounded annual growth rate (CAGR) in revenues over the next three to five years.
Clarifying that there was no intention of going to market, Mysore said: “You would only go to market if there was need for funds or investors wanted to exit. Currently, none of that applies. But a strategic investor could be interesting who could take the business to another level. Existing shareholder stakes do become smaller, but if you can take the business to the next level then it makes sense.”
Mysore took over in end-2010 and transformed the company and the franchise totally, by making a series of strategic changes. After Mysore’s entry, KKR strengthened the team in the 2011 auctions, took the hugely controversial decision of not bidding for the iconic Sourav Ganguly and started virtually on a totally clean slate.