Endeavor is 'in talks about $500m investment from Saudi Arabia'
Endeavor, the combined Hollywood talent agency and sports and entertainment company previously known as WME-IMG, is reported to be in talks with Saudi Arabia’s sovereign wealth fund for the fund to invest over $500 million in Endeavor, for a stake of between 5 and 10 per cent.
The money from Saudi Arabia's Public Investment Fund would help Endeavor expand its operations, Bloomberg reports, albeit no final agreement has yet been reached.
Ari Emanuel (pictured), Endeavor’s chief executive, is reported to have visited Saudi Arabia twice last year to discuss the prospect of an investment, and the deal could be sealed within the next two weeks, according to one source.
In August last year, WME-IMG (as it then was) benefited from a $1.1-billion injection led by investors in Canada and Singapore. The new funding round valued WME-IMG at $6.3 billion, up from $5.5 billion the previous year.
Endeavor’s existing investors include Silver Lake, SoftBank Group Corp., Singapore’s sovereign wealth fund and Canada Pension Plan Investment Board. Representatives for the Saudi Arabia sovereign wealth fund, Endeavor and Silver Lake declined to comment, when approached by Bloomberg.
Many observers expect Endeavor to go public at some point, having acquired IMG for $2.3 billion in 2013, followed by the $4-billion acquisition of mixed martial arts promoter UFC in 2016.
Saudi Arabia is undergoing a process of economic diversification and reform which has included the lifting of a ban on public cinemas imposed in the 1980s, offering possible new opportunities for Endeavor’s entertainment unit.
The sale of UFC was the subject of a warning from US Federal Reserve Bank supervisors, amid suggestions that Endeavor might have overpaid, with Bloomberg reporting that the sale, which was completed in July 2016 and handled by Goldman Sachs, the investment bank, included $1.8 billion to cover accumulated debt.
Bloomberg said that the warning was issued because regulators were trying to rein in risky lending practices by Wall Street’s biggest banks that “push a company’s debt load to more than six times its earnings.”
However, in November 2016 Moody’s said that its ratings for WME-IMG (as it then was) remained unchanged, adding that they “receive support from the large size of the company with global scale and diversified operations in client representation, event operations, distribution of media, sponsorship and licensing rights, as well as marketing and other services. WME-IMG has made several smaller acquisitions over the past year and a half which are expected to support EBITDA growth, enhance and diversify its service offerings while increasing the amount of owned content by the company.”