IPL 2020: Dream11 in talks with several PE, VC firms to raise $50 million

Upcoming funding round may dilute Tencent's stake

Online gaming company Dream11, which is the IPL’s new title sponsor, is in talks with several PE and VC firms to raise $50 million (Rs 375 crore), according to its communication to its investors. The latest funding round will further reduce the stake of existing investors like China’s Tencent.

According to people privy to the development, the funding round will pave the way for new investors, with existing ones such as Multiples Alternate Asset Management expected to dilute their holdings further. 

While Tencent’s exact holding in Dream11 is unclear, the Mumbai-based gaming firm’s management told Business Standard that it has a minority stake in the venture and owns less than 10 per cent. Besides Shenzhen-based Tencent, Dream11 identifies four other ventures as investors — London-based Steadview Capital, San Francisco-based Think Invest, Mumbai’s Multiples, and Bengaluru’s Kalaari Capital. 

The people said the new round was aimed at offering existing investors a window to encash their investments by reducing their stake, given that the new funding was expected to come through secondary share transfers. Earlier, investors like Multiples had diluted their holdings at a premium. 

Dream11’s management declined to comment on the matter. 

Sporta Technologies, a group entity through which the Dream11 management picked up the IPL sponsorship deal, was founded in 2007 by Harsh Jain and Bhavit Sheth. 

Jain, currently managing director, and Sheth, a whole-time director of Sporta, do not hold any shares. The front company behind the IPL sponsorship deal is fully owned by a US-based firm Dream Sports Inc, show documents available with the Registrar of Companies. 

Delhi Capitals’ Ravichandran Ashwin was seen in a PPE suit

Dream11’s latest move to raise additional funds comes amid protests from multiple corners over its selection as title sponsor. After the abrupt exit of Vivo following massive protests against Chinese brands, Dream11 bagged the deal for IPL 2020 at Rs 222 crore. However, bodies such as the Confederation of All India Traders (CAIT) have expressed dissatisfaction.

CAIT has approached BCCI President Sourav Ganguly and Sports Minister Kiren Rijiju on the matter. “The issue of granting title sponsorship of the IPL to Dream11, in which Chinese firm Tencent Global has a substantial stake, is an attempt to thwart the ‘vocal for local’ and ‘Atmanirbhar Bharat’ call by Prime Minister Narendra Modi, and contradicts various steps aggressively taken by the government to restrict participation of Chinese firms,” it added. 

The upcoming round will be the sixth for the 13-year old company. In April 2019, Steadview had picked up a stake in the venture, when a couple of its existing investors diluted part of their holdings.