Multiple investors, including home-grown private equity firm Chrys Capital and Facebook co-founder Eduardo Saverin’s investment vehicle B Capital Group, are in talks to undertake a sizeable secondary transaction in Mumbai-based online fantasy sports platform Dream11, potentially valuing the company at about $2.25 billion.
At least two more are in the running to pick up stakes held by three existing investors — Vani Kola-led Kalaari Capital, Renuka Ramnath-founded Multiples Alternate Asset Management and San Francisco-based Think Investments, multiple sources briefed on the developments told ET.
The contours of the deal include a $100 million secondary transaction and a $20 million primary round, which could see Dream11’s valuation more than double from $1.1 billion in April last year.
The shortlisted investors have been given three weeks for diligence, according to the sources.
Dream11 and Chrys Capital spokespersons declined to comment, while emails sent to Kalaari Capital, Multiples PE and the US and Singapore-based B Capital Group did not elicit any response till the time of going to press.
If the deal goes through, this will be the second time in the last 12 months that the three early backers of Dream 11 part sell shares in the company. Avendus Capital is the financial advisor for the deal.
In April last year, Hong Kong and London-based investment firm Steadview Capital picked up stake in Dream 11 for an estimated $60 million, catapulting the 11-year-old company into the rarified unicorn club, or companies with valuations of more than $1 billion.
Dream11, founded in 2008 by Harsh Jain, a University of Pennsylvania and Columbia University alumni, and Bentley University alumnus Bhavit Sheth, has emerged as an investor favourite over the course of the last two years.
In August last year, Times of India reported citing sources that Japan’s SoftBank and South Africa’s Naspers were eyeing a stake in the company, which has emerged as the first gaming unicorn from Asia’s third-largest economy.
Separately, in January, business daily Mint reported that New York-based investment firm Tiger Global Management was in talks to lead a $500 million primary and secondary funding round.
Dream11 also counts Chinese internet behemoth Tencent as a major investor, after the WeChat operator invested $100 million in 2018, a development first reported by ET.
The growing investor interest also follows a ruling by the Bombay High Court that no betting or gambling is involved in the fantasy games operated by Dream11 as their results are not dependent upon winning or losing of any particular team in the real world on any given day.
The ruling, which followed an earlier similar one by the High Court of Punjab and Haryana, has brought relief to India’s broader, but still-nascent online fantasy sports gaming sector, and cleared the decks for potential investments in the space.
Additionally, the Bombay High Court further ruled that Goods and Services Tax was not applicable on the entire deposit received from the player, but only on the consideration that is payable or collected for the supply of goods or services or both, within the platform.
Dream11, which claims to have over 70 million users on its platform, is also the official fantasy gaming partner to the Indian Premier League (IPL) and the Board of Control for Cricket in India (BCCI).
In fiscal year 2019, Dream11 India reported revenue of Rs 800 crore, from Rs 230 crore in the previous financial year. Losses, however, widened to Rs 130 crore, from Rs 65 crore in the previous reporting period, according to data collated by industry tracker Tracxn.