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Investment giant CVC Capital Partners expects to price its IPO Thursday and value the private equity business at $15 billion. CVC’s public disclosures as part of going public offer a tantalizing, if incomplete, picture of the private equity firm’s venture into sports.
While sports-related investments remain just a minority of its investments–perhaps 5% of its deployed capital–the firm has a dedicated sports, media and entertainment team led by CEO Rob Lucas. It’s one of just four sector teams the company believes help give it the ability to produce returns that beat index stock funds, a key hurdle for private equity firms to leap in order to attract large investors, like pension funds, which deploy trillions of dollars across Wall Street.
“Operating in dynamic sectors where the Group sees potential for significant deal activity, the sector teams provide proprietary deal origination angles, early identification of market trends,” CVC states in its prospectus. “CVC also has a strong focus on, and level of expertise in, the Sports, Media and Entertainment sector …. with significant specialised expertise around digitisation, advertising and media, broadcasting and commercial rights.”
CEO Lucas, a mountaineering enthusiast who has climbed Everest and K2, oversees the sports sector team, a group of seven bankers based in London. He’s been with Luxembourg-based CVC since 1996, three years after Citibank spun off the business. Overall, CVC has grown swiftly, including notably selling Formula One in 2016 to Liberty Media for $8 billion, four times what CVC paid using loans to buy F1 a decade earlier. Today, CVC manages $124 billion in private equity assets across some 139 portfolio companies, according to its website. Another $75 billion of AUM are in business lines in providing credit and liquidity to other investment firms as well as infrastructure investment.
Disclosures by CVC don’t offer a clear-cut picture of its sports investments in total, but information in the prospectus and company releases indicate that it has at least $6 billion committed in at least 13 sports businesses, according to information in the prospectus. They include a $1.15 billion investment in Sports Illustrated owner Authentic Brands Group, more than $2 billion committed to Spain’s LaLiga and a $1.6 billion, 13% stake in the Ligue de Football Professionel, the governing body of soccer in France, including Ligue1. Those three appear to be CVC’s largest sports commitments, though the dollar size for some of its investments aren’t available.
Beyond its large investment in European soccer, CVC also has a strong presence in rugby, owning part of Premiership Rugby, known as PRO14, acquired in 2019, a one-seventh slice of Six Nations Rugby it paid about $500 million for in 2021, and 28% ownership of the United Rugby Championship purchased in 2020. CVC also owns 20% of the Women’s Tennis Association it reportedly paid $150 million for, and it invested about $300 million in 2019 into a Bruin Capital fund.
CVC also owns stakes of undisclosed size in Volleyball World, the commercial entity governing the sport globally, India cricket premier league club Gujarat Titans, a “majority” of German sports betting firm Tipico, as well as about $230 million of Gaming1, a Belgian sports betting and online casino operator. Other investments related to sports not included in the totals include Dale Underwriting, which has a business insuring athlete contracts against injury, and Razer, an esports gear maker that went private two years ago in a $3.2 billion consortium deal led by CVC.
Odds are the company will continue seeking sports deals, given the large amount of money it has to invest. In July CVC closed its Fund IX, its fourth currently active Europe/Americas PE fund and the largest buyout PE fund ever raised at $27.8 billion, according to CVC. The fund hasn’t made any fee-generating investments as of March. CVC also has about $7 billion to deploy in a new Asia focused fund as well as $3 billion left to deploy in its Fund VIII, which likely was the vehicle that bought esports game publisher Jagex for a reported $1 billion with Haveli Investments in February.
Returns on sports investments aren’t broken out, but private equity investment has been good for CVC. In growth funds, where most of its sports holdings sit, CVC collects about 1.4% of assets during the investment period. That adds up: Last year CVC generated $1.42 billion in revenue and $678 million in net income from fees, carried interest and investment income.
“We believe an IPO of CVC provides an enduring long term institutional structure to support further growth, we remain completely focused on the continued success of CVC,” said Lucas in a statement on the IPO. “Neither I nor any of my active partners are selling shares as part of this transaction.” No wonder: If the sale goes as planned, Lucas be worth nearly $600 million in CVC shares when trading begins Friday.
