NBA owners unanimously approved a measure to expand private equity investment in minority stakes of teams. According to sources, an institutional investment fund now can take up to a 20% stake in a single team. Funds can buy minority stakes into a maximum of five teams, and they must take a minimum five-year hold in their stakes. The new measure comes after last year’s vote to approve Dyal Capital Partners, a division of Neuberger Berman, to take passive, minority positions across multiple teams.
Teams are looking to increase liquidity after a meteoric rise in franchise values over the past decade. Private equity firm investment also offers a new source of liquidity, giving owners an easy path to realizing profits on their investments -- and, amid the pandemic, a potentially critical injection of capital for controlling owners looking to sell down or limited partners who want to exit their positions. The owners' approval was first reported by Sportico.
