Den Networks to sell 55% stake in Delhi Dynamos to ship recycling group GMS

Cable TV distribution company Den Networks has agreed to divest its 55 per cent equity stake in Den Sports, which indirectly owns Indian Super League (ISL) team Delhi Dynamos, to Wall Street Investments Ltd for Rs 43.32 crore, as per a stock market disclosure.

VCCircle was the first to report the development.

The transaction includes the sale of shares from Den Networks and a preferential allotment by Den Sports. Prior to the agreement, Den was holding 100 per cent equity shares in Den Sports which in turn owns 100 per cent equity shares in Den Soccer.

The digital cable and broadband company was looking to divest stake in the football club business for quite some time, in order to focus on its core business.

Wall Street Investments is represented by principals of GMS, which is based out of Dubai and acts as an agent for its principals, which have a broader interest in the shipping industry.

A non-consumer facing company, US-based GMS, founded by NRI Anil Sharma, claims to be the world's largest cash buyer of ships for recycling, with offices in Hamburg, Dubai, Singapore, Shanghai and Tokyo besides representatives in all major recycling locations, including India.

Alang, in Gujarat, is the world's largest ship recycling yard. GMS has a division called GMS Capital which specialises in corporate acquisitions, mergers, new buildings and second-hand purchases, and tends to target deals that are either too small for larger PE funds to consider (in the $3-20 million range) or transactions that complement the firm’s core business.

Den Soccer is the operating company which owns, controls and manages ISL team Delhi Dynamos.

In the first three quarters of FY15, Den made a loss of Rs 45 crore on a revenue of Rs 8 crore from Delhi Dynamos FC, for ISL. The company, in its Q3 FY16 results, stated that cumulative earnings for the nine months from its soccer business stood at Rs 15 crore, with losses reducing to Rs 39 crore by the end of that quarter.

The second season of the ISL saw Delhi Dynamos FC attracting a fair number of sponsors. The franchise got Rudra Sports as co-sponsor besides SpiceJet and Skyworth. It has also struck a partnership with the UP Tourism Board.

Last year, during the second season of ISL, teams charged Rs 3-6 crore from sponsors for a place in the front of the team jersey, and Rs 1-3 crore for a slot in the back of jerseys.

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