Silver Lake has agreed to invest in the organisation behind New Zealand’s legendary All Blacks rugby team, as private equity firms continue to buy into sport amid the coronavirus pandemic.
Under the terms of the deal, Silver Lake will back a new commercial entity that will contain New Zealand Rugby’s revenue-generating assets, according to a statement on Wednesday.
The US private equity firm will put in NZ$200mn ($134mn) in exchange for a perpetual convertible security, which it will be able to convert into equity after three years. This values the new commercial entity at NZ$3.5bn.
Private equity firms and other institutional investors have stepped up their interest in sport since the outbreak of the coronavirus pandemic, which disrupted fixtures, forced games to be played behind closed doors, and cost leagues and teams around the globe billions in revenue.
Assuming that Silver Lake wins the remaining approvals required for closing, the deal will also set up a battle for influence over rugby against Luxembourg-based CVC Capital Partners, which has injected funds into Premiership Rugby in England, Pro14 club competitions and the Six Nations.
Silver Lake is already a major investor in sport, having taken a minority stake in the group that owns Manchester City football club in England’s Premier League. It is also a backer of sports retailer Fanatics and Endeavor, which owns the Ultimate Fighting Championship mixed martial arts series.
New Zealand-based institutional investors will be given the chance to invest a further amount of up to $100mn later this year.
Silver Lake, which will underwrite the co-investment, will then hold roughly 5.71-8.58 per cent of the commercial entity, rather than the 10-15 per cent originally proposed last year.
“I want to acknowledge that the journey to get here hasn’t been easy at times. There was healthy debate and some adjustments by all parties, but always with the good of the game at the heart of this process,” said Stewart Mitchell, chair of New Zealand Rugby.
Silver Lake’s investment in the All Blacks proved controversial when talks were revealed last year. A prospective deal provoked opposition from the powerful rugby players’ association, which has now backed the agreement.
David Kirk, the former All Black captain who chairs the New Zealand Rugby Players Association, described it as a “pivotal moment” for the sport.
“The agreement provides capital on a sound economic basis, and Silver Lake brings additional capability to execute on the new growth opportunities,” he said. “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.”
The investment requires approval from the country’s provincial rugby unions and the Maori Rugby Board.