One Championship raises $203.7m to diversify, expand

One Championship on Thursday said it has closed a US$150 million (S$203.7 million) equity financing round led by new investors Qatar Investment Authority and Guggenheim Investments.

The investment by the sovereign wealth fund of Qatar and the asset management and investment advisory division of financial services group Guggenheim Partners was made in parent company Group One Holdings.

One, a mixed martial arts promoter and sports media property, said it will use the fresh funds to diversify its content offering and expand farther outside Asia. The company has plans to target the United States market, home to its fiercest rival Ultimate Fighting Championship.

During the Covid-19 pandemic, One ventured into reality television to cushion the blow from the cancellation of its live events. In a separate announcement on Wednesday, it said the first season of its series The Apprentice: One Championship Edition will premiere on Netflix in the first quarter of next year.

The group has also been expanding in e-sports. One Esports hosted the One Esports Dota 2 Singapore Major earlier this year, which it said had 274 million viewers, making it the third-most-watched event for a Dota 2 Major.

One's latest round of funding comes as it pursues a public listing, with a special purpose acquisition company deal reportedly one of the options.

The company revealed listing plans after two Temasek-linked directors, Heliconia chief executive Derek Lau and Temasek managing director Fock Wai Hoong, resigned from the board in April.

One recorded US$48.2 million in revenue last year, up from a restated US$45.7 million the year before, according to financials filed with Singapore's Accounting and Corporate Regulatory Authority.

These figures, however, include non-cash consideration from broadcast partners, which has been a topic of contention with regard to the group's business sustainability. The consideration mainly comprises marketing efforts such as promotional plugs provided by broadcast partners, in exchange for the right to broadcast One's events.

In fiscal year 2016, such transactions made up 52.9 per cent of the group's revenue. One stopped declaring the breakdown of non-cash transactions in its financial statements for financial year 2017.

Cost of sales last year more than halved, resulting in gross profit rising to US$30 million from US$1.1 million. Loss after tax for the group narrowed to US$47.6 million from US$96.3 million.

At the company level, One Championship turned a profit of US$340.6 million, reversing a loss of US$83.5 million the year before. But this came only after it booked US$400 million from the sale of intellectual property (IP) rights to Group One's US subsidiary, incorporated last year.

Of the total consideration, US$200 million was in the form of shares in the US subsidiary and US$200 million was in cash. Details for how the fair value of the IP rights was arrived at were not given.

THE BUSINESS TIMES