The Singapore-based company, in which Temasek, through its private equity investment arm Heliconia Capital Management, invested last year, is planning an IPO within the next three years, said Chatri Sityodtong, its co-founder, chairman and lifelong martial artist.
Speaking to GlobalCapital Asia during a trip to London in late March, the former hedge fund manager for, among other firms, Lee Ainslie III’s $11bn Maverick Capital, would not be drawn on which banks the company had spoken to, saying only that they were “tier one global banks ”.
Even when a list of possible contenders — Morgan Stanley, Credit Suisse, Goldman, UBS, Deutsche and DBS — was fired at him, the veteran of over 30 professional Muay Thai fights did not flinch.
He cautioned instead that the beginning of any formal discussions, not least the award of any underwriting mandate, was at least a year away.
On where ONE Championship’s IPO was likely to happen, Sityodtong said a final decision was still some way off, too. But he has a clear idea and said that for a global listing of the size he had in mind, a mainstream US stock exchange, such as the NYSE, would be ideal.
Besides being the world’s deepest capital market, the US is home to some of the richest and most powerful sports media companies, including ONE Championship’s MMA rival, Ultimate Fighting Championship, or UFC.
In a sign of just how much interest there is in the once-fringe sport of MMA, UFC was acquired by a consortium of investors last year for $4bn — one of the biggest ever acquisitions of a sports franchise.
The acquisition was led by sports and entertainment talent agency William Morris Endeavor-International Management Group, together with private equity firms Silver Lake Partners, KKR and MSD Capital and MSD Partners, investment firms of billionaire Michael Dell and his family, which provided preferred equity financing.
Such a deal clearly shows the level of appetite for MMA among some serious Wall Street investors. But does such a deal mean Sityodtong might be open to the idea of selling, perhaps even to UFC?
“It is unlikely we would ever sell to UFC,” he said. “It’s possible that we might entertain other M&A offers, such as one from a major global media company. But, to be clear, plan A is to firmly go for an IPO.”
He adds: “I think that is something that the Singapore government is also very interested in, and why Temasek is a shareholder — they really believe in the company, what it can do and what it can be.”
From start-up to unicorn
Recent stories in the press have said ONE Championship’s IPO is likely to weigh in at $1bn. Yet those reports seem to confuse the total valuation of the company with the potential size of the IPO, which in reality is more likely to come in at a lighter weight.
For now, Sityodtong’s focus is on growing the business. And based on current growth rates and a compound annual growth rate of about 300% since 2011, he said ONE Championship’s valuation should hit the $1bn mark “in the next 12 months”.
For a young company that is quite an achievement. In under six years, ONE Championship has grown from a start-up with five employees and one event a year into Asia’s largest sports media property, with over 50 live MMA championship fights a year across Asia, a fanatical fan base of some 320m and growing, and a global broadcast audience of 1bn in 118 countries.
Throw in 10 year broadcasting deals with Fox and Star Sports and corporate partnerships with Walt Disney Pictures, Universal Music Group and Casio, the Japanese electronics group, and it is clear big business wants a piece of what ONE Championship is offering.
Sityodtong’s hope is that institutional investors will too. But how should potential investors see and understand ONE Championship?
The company is so much more than just an organiser of fighting events, said Sityodtong.
On one hand he describes it as his life’s work, not only showcasing a fighting art form believed to have been practised in Asia for 5,000 years, but also a platform helping to transform the lives of its fighters, many of whom have had impoverished, often tragic, family backgrounds.
On the other, Sityodtong said what he is creating is the first truly pan-Asian sports media property to rival the National Football League or the National Basketball Association in North America, and the English Premier League or UEFA’s Champions League in Europe.
“There are several multi-billion-dollar sports media properties in each region of the world. In Asia there’s nothing on a pan-Asia basis. Yes there is the IPL [Indian Premier League] for cricket and the China Super League for soccer… but there is nothing pan-Asia that unites four billion people.”
Tech club not fight club
“We view our comps very much along the lines of an Uber, or Grabcar , or Go-Jek [car and motorbike-hailing companies in South Asia],” he said. “We’re in the TMT sector and that’s how I believe investors should see us and understand us because we ultimately have a number of characteristics that are similar to these companies and the Facebooks, Snaps or Airbnbs of the world.”
In an age of disruption, Sityodtong clearly sees ONE Championship as a disruptor. In the same way some of these start-ups to tech titans have revolutionised the way people get around, communicate or book accommodation, Sityodtong believes ONE Championship is similarly using technology to provide an all-round better service and experience to sports fans than the traditional sports media industry.
Essentially that is delivering live and pre-recorded content, with a more immersive and engaging experience across multiple devices, to its fans whether they are in the stadium, at home, or at a bar.
Sityodtong uses the phrase over-the-top, or OTT, to describe this, citing Netflix, the US entertainment group, as the best example of an OTT platform. Netflix not only produces and owns some of its content, as ONE Championship does, but enables its subscribers, wherever they are and whenever it is, to watch what they want, how they want it. That freedom and choice is not something most of the incumbent cable or satellite pay-TV services so far offer.
In turn, Netflix has had a profound impact on the TV and film industry and Sityodtong believes ONE Championship has just as much disruptive potential.
“When I look at this opportunity with my Wall Street eyes, many of the major sporting leagues around the world are content players, enhanced by technology. And it’s the use of technology — including advances in artificial intelligence and virtual reality — that’s going to really explode the fan base and audience engagement.”
He added: “In my mind, investors will be interested in investing in a company that can demonstrate it has a large and growing community of users that are not only engaging and interacting with content, but whose actions can of course be monetised. Facebook monetises its community though advertising, and we can too. But we also sell media rights, or license our content to media portals and broadcasters, as well make money through ticket sales and merchandise. With four billion people across Asia, this is a highly scalable opportunity.”
Sityodtong’s passion for ONE Championship is palpable. But he is remarkably grounded too, a quality perhaps moulded by his rags to riches life story. As a boy, he and his family were essentially left with nothing when the Asian financial crisis forced his family’s real estate business into bankruptcy. Sityodtong fought on nevertheless, managing years later to put himself through university in the US, including an MBA at Harvard, at the same time supporting his family.
After a successful career as a Silicon Valley entrepreneur and hedge fund manager on Wall Street, the rise of ONE Championship seems, ultimately, to represent the fight of his life.
This article was written by Duncan Kerr, managing editor, Euromoney Institutional Investor Thought Leadership