Boks' R1.3b private equity deal on the rocks after opposition from SA's top rugby unions

A crucial vote, which will determine whether the $75 million (approximately R1.3 billion) deal for a 20% stake in SARU's commercial rights company is approved, is scheduled for Thursday, October 17.

As reported by News24, the deal, which seemed poised for approval over the weekend, is now in jeopardy. The country's top provincial unions have sent a letter to SARU president Mark Alexander and CEO Rian Oberholzer requesting a postponement of Thursday's meeting.

Provincial unions including the Lions, Blue Bulls, Sharks, and Western Province have expressed their desire to delay the meeting to "prevent a public spectacle which is not in the interests of SARU or its members."

By Monday evening, seven out of SARU's 14 member unions had signed the letter opposing the ASG deal and requested that an alternative proposal be submitted within three months.

For the ASG deal to advance, it would require the support of 75% of the unions, as it involves establishing a commercial entity and selling 20% of the new company's shares to ASG, which has no prior involvement in Africa or rugby.

However, growing opposition has put the deal's future in doubt before the vote.

SA Rugby officials have been working to persuade their members to support the deal over the past two weeks, but the concerns raised by the top unions have undermined SARU's immediate plans to secure approval for the ASG arrangement.

In their letter, the unions requested more time to assess the validity, mechanics, and overall benefits of the ASG deal before Thursday's vote.

The letter stated: "Many of the senior executives of the undersigned members and their shareholders have significant experience in public and private capital markets, and the fee proposed is not appropriate by any measure. The fee structure raises serious governance and ethical concerns regarding the transaction and any independent advice received by SA Rugby."

Concerns were also raised about the potential long-term impact of the deal on SA Rugby's commercial operations and revenue control.

"The transaction could lead to a permanent and material change in the commercialization and control of revenue in South African rugby, including the Springbok brand. It also poses a significant financial risk to all its members," the letter continued.

"This uncertainty will affect rugby development programs aimed at nurturing the next generation of Springboks. Such an outcome necessitates a process that is fair and transparent, which has not been achieved to date."

According to the News24 report, Alexander and Oberholzer were still trying to persuade the unions of the benefits of the ASG deal as of Monday, including a meeting with Stormers officials in Cape Town.

The vote for the Stormers and Western Province will be suspended at Thursday's meeting due to the union being placed under administration by SARU following years of governance issues.

In addition to the Stormers, the other three United Rugby Championship franchisesâ”Bulls, Sharks, and Lionsâ”already have private equity partners.

Venture capital expert Logan Govender commented on the situation, stating that it's unclear whether the R1.3 billion valuation of SA Rugby is fair.

"We don't know whether the valuation is fair or not," he told News24. "It does seem low compared to the New Zealand brand, which is valued at around R2.4 billion with Silver Lake. The Springbok brand appears much stronger, with a larger supporter base. The failure of Super Rugby after the exit of South African teams illustrates this."

Govender suggested a better approach would have been for SARU to appoint an advisor and seek expressions of interest globally to obtain non-binding offers based on valuations from an independent advisor.

"There has been no transparency in the process, and only one bidder has been selected for a national asset like the Springboks."

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