Chinese tech giant Tencent Holdings is adding a Mumbai-based daily fantasy sports platform to its list of investments as it shops for businesses across Asia.
The Economic Times reported that Tencent is mulling investing an estimated Rs 656.63 crore (US$100 million) in online fantasy sports platform Dream11, with talks now in the advanced stages.
The news of Tencent’s investment in Dream 11 came on the heels of the Punjab and Haryana High Court’s ruling that fantasy sports are games of skill, not chance. Unlike gambling, Justice Amit Rawal ruled that playing fantasy games required considerable skill, judgement and discretion.
Sources told the news outlet that Tencent, considered the world’s fifth-largest internet company, offered a term sheet for a transaction to the daily fantasy sports (DFS) platform. If the deal pushes through, Dream11’s pre-money valuation will climb to around $400 to $450 million.
Both companies are fairly quiet about their ongoing negotiations, with a Dream11 spokesperson declining to comment on the issue.
Founded by Harsh Jain and Bhavit Sheth in 2012, Dream 11 was a Series B-funded startup that offers fantasy cricket, football and kabaddi markets. The company reportedly has over 4 million gamers across India and the United States.
Some of its earlier backers include early-stage venture capital firm Kalaari Capital, Renuka Ramnath-led private equity firm Multiples Alternate Asset Management and San Francisco-based investment firm Think Investments.
With Tencent’s potential entry into Dream11, a shake-up in the composition of the company’s ownership is bound to happen. No one knows what could happen to both Jain and Sheth when the Chinese firm formalizes its investment. There are speculations that Tencent’s investment will have a secondary component that could lead to either partial or complete exit of the venture capital firms in Dream11.
If the deal pushes through, Dream11 will be the second company in India to receive an investment from the Chinese tech giant over the past two months. In February, Indian music streaming service Gaana got a total of $115 million in investments from Tencent.
