Dyal HomeCourt Partners, the US private equity firm, has added another team in the NBA, the top North American basketball league, to its portfolio after acquiring a minority stake in the Atlanta Hawks.
The group has purchased a 6% stake in the franchise, valuing it at nearly $2 billion.
Tony Ressler, the Hawks majority owner and co-founder of investment company Ares Management, who purchased the team for $850 million in 2015, did not participate in the sale. The shares were sold by nine minority shareholders.
HomeCourt was launched in 2020 under a partnership with the NBA and is managed by Dyal Capital, a division of Blue Owl, the alternative asset manager.
It was the first private equity fund pre-approved by the NBA and its 30 owners to invest in multiple franchises.
HomeCourt is the only institutional investor that can acquire a pool of minority stakes in an unlimited number of NBA teams.
The fund is reportedly looking to initially raise $1 billion for stakes in six teams. Blue Owl has $82.9 billion in assets under management.
The Hawks become the third NBA team Dyal has invested in, joining the Phoenix Suns and Sacramento Kings.
Dyal purchased a 5% stake in the Suns in July 2021, at a valuation of $1.55 billion, and followed that up with a share in the Kings in August last year, which valued the team at $1.8 billion.
Financial services firm Moelis and Company served as financial advisor to the Hawks during the transaction.
Michael Rees, Blue Owl's co-president, said: "Partnering with Tony and the Hawks is an exciting prospect given the strong growth the franchise has achieved over the past few years.
“In addition to the management team, the franchise benefits from being located in one of the fastest-growing metropolitan areas in the country. We look forward to working together and are excited for what the future holds, both on and off the court."
In late 2019, the NBA launched an investment vehicle for private equity firms to buy minority stakes in teams.
This was accelerated by the Covid-19 pandemic which had a significant financial impact on the league and its teams.
Minority stake sales have since become more common in the NBA with multiple transactions last year including Arctos Partners purchasing a small stake in the Kings and the Golden State Warriors and Sixth Street investing in the San Antonio Spurs.
The NBA’s rules on private equity investors state a fund can buy as much as 20% of a franchise, and own equity in up to five teams.
Through its relationship with the league, HomeCourt is the only fund authorized to own equity in more than five teams, while no team can have more than 30% of its equity owned by private equity funds.