NBA Africa deal mixes sports and emerging markets

Helios Investment Partners has backed a deal that values NBA Africa at $1bn in enterprise value.

The world of sports continues to attract private capital hoping to capitalise on a new age of atomised, direct-to-consumer content.

On Monday, the National Basketball Association said it had formed an entity with backing from Africa-focused private equity firm Helios Investment Partners. That entity, NBA Africa, has an enterprise value of $1 billion and will conduct the league’s business on the continent, as well as overseeing the ongoing, inaugural season of the Basketball Africa League.

“The rapid development of innovative, mobile-friendly digital content platforms and other relevant technologies is democratising access to content, and will enable NBA Africa to reach across socioeconomic classes,” Tope Lawani, managing partner of Helios, said during a virtual press conference.

The prospects for NBA Africa are attractive due to a broad and diverse following across the continent which is “significantly under-commercialized”, Lawani added.

“As we see the rollout of, first, cell phones, and now the explosive growth of smartphones on the continent, that to me is the true game changer,” NBA commissioner Adam Silver said during the press conference.

The league hopes to directly manifest the substantial interest in African players and the NBA more broadly into actual product consumption.

The latest development comes amid heightened interest in sports from private investment firms. In April last year, the NBA selected Dyal Capital Partners to launch a fund for institutional capital to take minority position in NBA teams. This month, the NBA approved sports-focused Arctos Sports Partners’ acquisition of a roughly 5 percent stake in the Golden State Warriors, according to media reports.

Enticed by reoccurring revenues undergirded by fanatical fan bases, firms including CVC Capital Partners, KKR, Silver Lake, Bain Capital and PEI Media owner Bridgepoint have invested in sports.

In 2019 the global live sports industry generated $144 billion of revenue, about half of which came from North America, according to PwC estimates. The same year, 44 transactions accounted for nearly $9.4 billion of deal value in the US and Europe.

Helios is joined by a consortium of players, including Dikembe Mutombo, the legendary Congolese-American former player, and is led by Babatunde Folawiyo, the chief executive of Nigerian-headquartered industrials firm Yinka Folawiyo Group.

London-headquartered Helios will invest in NBA Africa from a vehicle named Helios Fairfax Partners Corporation, according to the press release. The firm is seeking $1.4 billion for its fourth flagship fund and has received backing from CDC Group and the International Finance Corporation, according to PEI data.

“The support we’ve received from our outside strategic partners will help the funding the NBA was already providing and is willing to continue to provide to continue to grow the BAL,” NBA Africa chief executive Victor Williams said. The investment will help expand the NBA’s presence in target markets and fund social responsibility initiatives focused on gender equality and economic inclusion, he added.

According to Lawani, the proliferation of distribution outlets, particularly in digital, pairs perfectly with what he refers to as the “atomisation” of content. In basketball, what was once a full game on television at a set hour can now be broken up into highlights and clips delivered across various media.

“With this distribution of outlets, the demand for content globally is rising quite significantly, and along with it, the cost of content,” Lawani said. “Sports is quite unique in the sense that is unscripted, and no two games are the same, so it tells its own story. Being invested in that content presents an attractive opportunity.”