Dream Sports, the parent company of India’s fantasy sports platform Dream11, is in talks with American investment banks as it looks to list its shares in the US early next year.
The Mumbai-based unicorn may raise about USD 1.5 billion through the listing at a valuation of USD 6 billion, a report by local media Economic Times said, citing three sources.
Late last month, when the company closed a secondary USD 400 million round from Falcon Edge, TCV, and D1 Capital Partners, it was reportedly ascribed a valuation of around USD 5 million. However, according to the ET report, the company was valued at USD 3.6 billion in the last round, up from USD 2.5 billion in September 2020, when it raised USD 225 million from Tiger Global and ChrysCapital, among others.
Investment banks Morgan Stanley, JP Morgan, and Citigroup are among those that made presentations to the company in the first week of April, the report said. It added that neither the initial public offering (IPO) mandate has been given yet, nor the quantum of fundraising or the timeline has been determined.
“The bankers have made presentations. The company indicated that the next round of fundraising could be through a listing. So talks are in that direction,” the report said. “The planned listing may involve both a primary and secondary sale of shares. Some of Dream Sports’ early backers may use this opportunity to exit.”
Dream Sports has joined a growing list of companies that are looking to go public. Over a dozen companies including food giant Zomato, insurance marketplace Policybazaar, e-grocer Grofers, payments firm MobiKwik, beauty retailer Nykaa, logistics startup Delhivery, and e-retail giant Flipkart are looking to go public in the next 12 to 24 months.
It is also possible that Dream Sports may opt to list its shares through a special purpose acquisition company (SPAC), alternatively known as a blank cheque company.
SPACs are shell companies that are formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing private company. After the acquisition, a SPAC is usually listed on one of the major stock exchanges. For private companies, SPAC is an easier and cheaper alternate route to raise funds, as compared to the traditional IPO process, which is cumbersome, expensive, and time-consuming.
In March, San-Francisco-headquartered seed-stage investment company Think Investments and Gurugram-based venture capital firm Elevation Capital (formerly known as SAIF Partners), floated a blank cheque company, Think Elevation Capital Growth Opportunities, focusing on Indian technology startups that are looking to go public in the US.
Harsh Jain, co-founder of Dream Sports, is a board member of this newly launched SPAC along with Paytm founder Vijay Shekhar Sharma, and SoftBank’s former managing partner Kabir Misra.
Although SPACs have existed for decades, it was last year that they became increasingly popular. According to a Reuters report, based on data collated by Dealogic, US-listed SPACs have raised a record USD 82 billion through IPOs last year, while more than 120 SPACs have raised USD 36.19 billion by mid-February 2021.
Towards the end of last year, SPACs gained attention in Southeast Asia as well, with Indonesian unicorns like Tokopedia and Traveloka considering it as a possible option to go public. It seems that this trend may also catch up in India. Reportedly, Flipkart and Grofers are also mulling to take this route.