Abu Dhabi-owned City Football Group gets $4.8 bn valuation in 10% stake deal

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The City Football Group, the owner of the Premier League side Manchester City among others, has been valued at $4.8 billion in a deal to sell 10% of its stake to the US-based private equity firm Silver Lake.

City Football Group, meanwhile, is also said to be in takeover talks with Indian Super League side Mumbai City FC.

Silver Lake’s investment in the City Football Group is reportedly valued at $500 million. The City Football Group is the holding company of the Manchester City FC with stakes in various other football clubs around the world.

Silver Lake has reportedly also approached Chelsea FC for investment.

“We and Silver Lake share the strong belief in the opportunities being presented by the convergence of entertainment, sports and technology and the resulting ability for CFG to generate long-term growth and new revenue streams globally,” City Football Group chairman Khaldoon Al Mubarak has said on the development.

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“We welcome the opportunity to work with Egon and the Silver Lake team and its network to facilitate the global growth and deepening of CFG Club fan-bases and the development of our business as a whole.”

Silver Lake managing partner Egon Durban, said, “We are excited to partner with the Board and CFG’s world-class management team to help drive the next phase of CFG’s growth in the fast-growing premium sports and entertainment content market.”

The deal, according to the Financial Times, has been inked on Saturday. Mubarak and Durban are the signatories. The business daily has also reported that Silver Lake will hold on to the stake for a period of ten years, before a possible IPO or sale to another private investor, the FT reported.

City Football Group, in five years of its existence since 2014, has acquired Melbourne City FC and a majority stake in New York City FC. It also has minority stakes in Spanish football club Girona FC, Chinese club Sichuan Jiuniu FC, Japanese club Yokohama F. Marinos and Uruguayan Club Atlético Torque.

It is the second time Abu Dhabi has sold a stake in City Football Group. In 2015, it had sold a 13% stake to a China Media Capital-led consortium for $400m, which then valued the club at over $3bn

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Technology investor Silver Lake has over $43 billion in combined assets under management and committed capital. It has stakes in companies like Alibaba, Dell, and Skype has also invested in the Ultimate Fighting Championship (UFC) and Endeavor, a Hollywood-based talent agency. The company says its investments generate more than $230 billion of revenue annually.

The Silver Lake deal comes as Manchester City posted $692 million revenues for last season, with the Premier League champions posting a profit for the fifth straight year. Pep Guardiola’s men completed an unprecedented quadruple of England’s domestic trophies by winning the Premier League, FA Cup, League Cup, and Community Shield.

City Football Group, the owner of English Premier League champions Manchester City, is selling a stake in its business to US private equity firm Silver Lake for $500m (€453.8m), according to the Financial Times.

The deal covers a shareholding of more than 10 percent and gives the Abu Dhabi-based CFG a valuation of $4.8bn. The Financial Times said Silver Lake signed the deal with CFG chairman Khaldoon Al Mubarak last Saturday, and an official announcement was expected today (Wednesday).

CFG owns a portfolio of football teams around the world. After buying Manchester City in 2008, it acquired Major League Soccer’s New York City FC, Melbourne City FC of the Australian A-League, Yokohama F. Marinos of the J.League in Japan, and Chinese second-tier club Sichuan Jiuniu. The group is also close to purchasing a stake in the Indian Super League side Mumbai City FC.

Silver Lake was originally an investor in technology firms but has more recently expanded into entertainment. Its investments include minority shareholdings in US-based sports and entertainment group Endeavor – the owner of the IMG sports marketing agency – and mixed martial arts property Ultimate Fighting Championship.

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The Financial Times reported that Silver Lake intends to hold its stake for a decade, and was attracted in part by the high prices paid for football media rights by broadcasters and digital platforms. Silver Lake’s $500m injection will help fund CFG’s expansion plans, including the planned construction of a stadium in New York.

In 2015, a consortium led by Chinese investment company China Media Capital paid $400m for a 13 percent stake in CFG, valuing the group at more than $3bn.

The Silver Lake deal will leave CFG’s founder Sheikh Mansour, the billionaire businessman and member of the Abu Dhabi royal family, with a 77 percent shareholding.

Manchester City recently announced record revenues of £535.2m ($693m/€625m) from the 2018-19 season. That season saw Manchester City’s senior teams win six trophies, including an unprecedented clean sweep of domestic competitions for the men’s team, covering the Premier League, the FA Cup, the League Cup and the Community Shield. The women’s team claimed a cup double, winning the FA Women’s Cup and the FA WSL Continental Cup.

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