When the immensely popular sporting-cum-entertainment format, Indian Premier League, is in the eye of the worst-ever storm, Malaysia’s energy behemoth Petronas or Petroliam Nasional Berhad, one of the biggest sporting endorsers in Asia, has emerged as the front-runner to acquire 26%-49% stake in franchisee Kings XI Punjab.

Sources familiar with the development told VCCircle that an initial agreement was struck about ten days back, just when the IPL controversy centering round commissioner Lalit Modi started unfolding.  In fact, the team and Modi were preparing to make an announcement on the final day of IPL season-3. "We were readying for an announcement since April 3," this source explained.

Incidentally, Kings XI Punjab, one of the eight operating IPL teams, is also under the tax scanner with authorities investigating alleged financial irregularities in the three-year-old T-20 cricketing league. The principal owners of Kings XI Punjab are Hindi film actor Preity Zinta, Mohit and Gaurav Burman of the Dabur family, Bombay Dyeing joint managing director Ness Wadia and Karan Paul, chairman of Apeejay-Surrendra Group. With the Petronas deal, Ness Wadia may be looking at an exit from the cricketing franchise while the Burmans may be significantly paring their holding or contemplating an exit depending on how this IPL controversy ends.

As the deal is not closed yet and discussions are still on between the franchisee owners and Petronas, it is possible that the current developments may be pushing a readjustment in valuation and deal terms. Before the controversy came to light, IPL frachisee valuations were topping $300 million particularly with the IPL doors opening for two new teams.  But, market watchers say, the long-term potential of the format, whether it is held in India or overseas, is relatively established with the conclusion of three successful seasons. 

An emailed query to Petronas remained unanswered at the time of posting this report. In response to a VCCircle mail seeking a confirmation on the development, Kings XI Punjab said, it "will not respond to speculation and denies any such development."

Sources said, the deal talks centered round Petronas buying Ness Wadia’s 23% stake as well as a part of the stake held by the Burmans, who are the largest shareholders. Interestingly, Preity Zinta, who also holds 23%, will emerge as the largest shareholder along with Petronas following the deal, sources added. In fact, the actor may be looking at consolidating her shareholding by buying some of the stake held by co-owners depending on how the IPL saga unfolds. However, Petronas may not be leading the management, it is understood. Karan Paul and Shakun Khanna, who hold around 5% stake each in the franchise, will continue with their shareholding. 

VCCircle was the first to report the interest of Petronas in IPL and possibly KXIP. The $77-billion Petronas is most visible in the sporting world through its involvement with Mercedes F1 team even though it is also part of several other motor sporting events globally. Pertronas, ranked as Asia's most profitable corporation by Fortune, is also involved with other sporting events such as basket ball and cycling at a relatively smaller level. But Petronas has rarely done any large equity deal and has limited its participation to big-buck sponsorships. 

One source said, Petronas was backed by the Malaysian government in its pursuit of IPL interests, given the huge branding platform it would provide for tapping the country's tourism potential. 

Petronas landed quietly landed in India during 2005-06 through a fully owned subsidiary. It has remained a silent player with a crucial and significant just below 15% stake in Cairn India.

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