The ongoing saga over SA Rugby’s private equity deal has taken another twist after it was emerged that influential South African businessmen and international investors, who were part of the failed Ackerley Sports Group (ASG) proposal, have joined forces in a bid to become the governing body’s new commercial partner.
According to a report in the Sunday newspaper Rapport, the fledgling faction which emerged from a group of South African franchises will also be known as The Rainbow Consortium.
On February 4, a letter which was signed by Stephen Saad, Marco Masotti (on behalf of the Sharks), Jannie Durand, Johan van Zyl (on behalf of the Blue Bulls), Johan le Roux and Bruce MacRobert (on behalf of the Stormers) was sent to all of South Africa’s unions’ presidents and chief executives as well as the South African Rugby Union‘s (SARU) president Mark Alexander, its chief executive and the SARU executive committee.
Ken to acquire a stake in SA Rugby’s commercial rights
Although the letter does not name the overseas investors, it specifies the Rainbow Consortium’s intention to obtain a stake in SA Rugby’s commercial rights.
Durand is the chief executive of Remgro, the company of which billionaire and Blue Bulls stakeholder Johann Rupert is the chairman. Van Zyl is the chief executive of African Rainbow Capital, the company of which another billionaire and Bulls stakeholder Patrice Motsepe is the chairman.
The Rainbow Consortium is the only group which has given official notice ahead of last Thursday’s meeting of SARU’s executive board in Johannesburg that they were interested in an equity transaction with SA Rugby.
“This letter reaffirms our interest in proposing a new or alternative SA Rugby share transaction following the expiry of ASG’s exclusive negotiating rights on 31 December 2024,” the letter states.
“We have been in active discussions with certain international investors who have previously indicated their interest in investing in South African rugby through the ASG transaction.”
The heavyweight businessmen who signed the letter revealed that they are confident that the foreign investors will get involved, but said they “cannot guarantee it at this stage”.
The Rainbow Consortium feels they will thus have the right blend of local investors with knowledge of the SA Rugby ecosystem, and global investors who have the ability to develop the Springboks brand abroad.
“In our opinion, the development and growth of SA Rugby’s commercial interests would be best served by a consortium formed with a partnership philosophy, where no single investor or group has absolute control,” the letter adds.
“Through their participation in the ASG transaction process, the international investors have done a significant amount of work. Their inclusion in our consortium will enable us to move forward quickly with minimal additional disruption and duplication.”
SA Rugby’s membership make significant decision in plotting their financial future
They expect the South African investors to hold a 50% stake in The Rainbow Consortium, with the other 50% being owned by the international investors.
The Rainbow Consortium said they are aware of the importance of a Black Economic Empowerment component in the consortium, as well as the involvement of former players.
‘Investment amount should not be less than $75 million’
They feel the investment amount should not be less than $75 million.
“However, valuation must be confirmed during the transaction process.”
If they succeed, The Rainbow Consortium will then, like ASG, acquire a 20% stake in a newly formed commercial SA Rugby company. The Rainbow Consortium proposes a similar investment structure to that agreed with ASG before that deal fell through.
“But we will refine and amend it based on further evaluation and in discussion with Saru and/or its independent transaction advisor,” they said.
Transaction fees will be payable, as in the case of ASG, but none of the proceeds from this transaction will be used to pay commission or success fees to any third party.
In the letter, The Rainbow Consortium highlights the progress made in agreeing a “fair Test match hosting model”.
Rapport revealed that the so-called smaller unions will again receive income from Springbok Tests from 2025 onwards. In 2024, the hosts of the Tests received all the income.
SARU can help host Tests again in 2025 and pay the host unions for among other things, the use of their facilities, and preference will be given to the various franchises’ season ticket and lodging holders.
The Test model will only be discussed and then finalised within the next few weeks.
On Thursday that it would appoint a financial institution to advise it on the way forward.
Src: Planetrugby.com - https://www.planetrugby.com/news/opposing-heavyweight-factions-launch-shock-move-in-sa-rugbys-private-equity-deal-saga-report
