SA Rugby refuse to give up on equity deal meeting
12/05/2024 05:44 AM
A major SA Rugby private equity deal – reported to be in the region of R1.4 billion – was supposedly in line to receive the green light in mid-October, before government intervention.
Seattle-based Ackerley Sports Group (ASG) seemed set to acquire a 20% stake in Saru’s commercial arm for an outlay of R1.4 billion, but SA Rugby postponed a decisive Special General Meeting (SGM), at the request of Mr Gayton McKenzie, the Minister of Sport, Arts and Culture.
SA Rugby still needs a 75% majority for approval, and this Friday, 6 December, the 13 South African rugby unions will vote on this controversial matter.
At the latest meeting between SA Rugby and the Portfolio Committee on Sports, Arts and Culture this week, president Mark Alexander maintained a clear position that a private equity deal was an absolute necessity for the sustainability of the sport in South Africa.
The erratic economy and ongoing financial struggles have left SA Rugby desperate for international investment, and it now remains to be seen whether ASG ends up getting the green light, or whether a reported alternative local investment proposal could now be considered.
Why did SA Rugby postpone the last Special General Meeting?
Minister McKenzie said in his letter: "It is always important that levels of consultation and information sharing are adequate in matters such as these, especially when regarding matters of significant public interest.
"I would therefore like to humbly request that tomorrow's scheduled meeting to decide on the way forward with your members be postponed so that I can be fully apprised of the particulars surrounding this proposed deal, or any deal that may be agreed to through your structures."
Alexander said: "We look forward to providing any information the Minister may require.
"We believe that the proposed partnership, along with our identified partner, offers an opportunity for organic growth rather than simply serving as a cash injection. Importantly, it ensures that the Springboks will remain under the control and direction of SA Rugby, safeguarding the future of our organisation."
EQUITY DEAL TIMELINE:
- 2018: SA Rugby initiates exploratory discussions with several private equity firms
- 2019: The SA Rugby General Council, composed of its member unions, authorizes the Executive Council to formally begin negotiations with CVC
- 2020-2021: The impact of the pandemic stalls conversations as the Springboks do not play a home test in front of fans for two years
- 2022: The conversation resumes in earnest although the due diligence process proceeds at a slow pace.
- 2023: Negotiations with CVC continue slowly. SA Rugby asks CVC to improve their post-Covid offer. During this time, several other potential investors express interest.
- 2023: Discussions are held with multiple potential investors but, by year end, only CVC and newcomer Ackerley Sports Group (ASG) remain serious contenders.
- 2023 (December 8): SA Rugby's member unions unanimously approve ASG as the preferred bidder following presentations from both entities, which include details on the associated success fees and transaction costs. The members mandate management to present a formal offer to the Council for consideration
- 2024 (March, May and June): Information sessions are held with all members unions, during which all questions are addressed. Additional sessions for smaller groups are planned.
- 2024 (October): Further information sessions are held for members in five separate groups to thoroughly examine the proposal.
- 2024 (16 October): A Special General Meeting postponed
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