Dyal Capital is nearing a deal to make an investment in the Sacramento Kings National Basketball Association team, according to people familiar with the matter, as the firm works to assemble a portfolio of stakes across the league.
The deal, which could be announced as soon as this week, would give the investment firm a nearly 5% stake in the team at a valuation of $1.5 billion, the people said. (Another person pegged the valuation at closer to $1.8 billion.)
Dyal, a unit of the newly public Blue Owl Capital Inc. is best known for taking minority stakes in private-equity and credit firms. It would do the Kings transaction from its Dyal HomeCourt Partners fund, formed to provide liquidity and growth capital to teams across the NBA.
The deal would be its fund’s second such transaction. On July 6, Dyal said it would take a similar-sized stake in the Phoenix Suns.
Dyal is initially hoping to raise about $1 billion for the fund and plans to build a portfolio of minority investments in six different teams, with a goal of eventually doubling that, according to people familiar with the strategy. It also could increase its stake in an existing holding if other minority owners are looking to sell.
Blue Owl Co-President Michael Rees, who heads up Dyal, has said the HomeCourt strategy is about looking at a team’s entire business model, not about trying to pick the ones that will perform best over the next couple of seasons.
Unlike the Suns, which are currently vying with the Milwaukee Bucks for the NBA championship, the Kings haven’t been top performers on the court this season. But the team’s ownership group, led by Tibco Software Inc. founder Vivek Ranadivé, has helped make its games a destination, overseeing the construction of the Golden 1 Center arena and a surrounding campus offering retail and dining options as well as a boutique hotel.
Based in New York, Blue Owl is the product of the three-way merger of Dyal, credit-investment firm Owl Rock Capital Partners and a blank-check company. The firm manages more than $52 billion in assets across various strategies.
Dyal is one of a number of investment firms to plow money directly into sports franchises of late. Last month, the San Antonio Spurs NBA team announced an investment from Sixth Street Partners alongside Dell Technologies Inc. founder Michael Dell.
Also last month, Ares Management Corp. said it had committed over $1 billion in debt and equity over the previous six months to the sports, media and entertainment sectors. Among its targets is Spanish professional soccer club Atlético de Madrid and the San Diego Padres baseball team.