NEW DELHI: The Sahara India Group has picked a 42.5% stake in Force India, the Formula One team co-owned by liquor baron Vijay Mallya, for $100 million. The team will now be called Sahara Force India.
The stake sale to Sahara, which also sponsors the national cricket team, was through a fresh issue of shares.
"This investment will give us a huge boost in R&D and help us take a technological leap," Mallya, who owns United Breweries and Kingfisher Airlines, said at a joint press conference late on Wednesday. The announcement comes ahead of the Indian Grand Prix at Greater Noida on October 30.
Mallya, who will continue to be the Team Principal, said he will hold 42.5% stake in the company while Michiel Mol, with whom he acquired the team from Dutch auto firm Spyker in 2007, will hold the balance.
Sahara chairman Subrata Roy said, "The advent of F-1 in India is a matter of pride and we hope to reach the top as soon as possible." Roy will now be the chairman of Sahara Force. At No. 6, Force India team is now 24 points behind Renault team before the Korean Grand Prix this weekend, and is hoping to finish fifth by the end of the season.
Sushanto Roy, executive director, Sahara, said, "F-1 is going to become very big in India and we thought it is important to invest in this sport. It offers us a good branding opportunity with global exposure. However, it needs a lot of investment if one has to aim for the top."
Mallya and Sahara Chairman Subrata Roy also own a cricket team each in the India Premier League. While Mallya owns Royal Challengers Bangalore, Roy bought Pune Warriors India last year for a record $370 million.
Sports marketing experts said it was a win-win alliance. "Sahara has long been associated with cricket and knows how to take F-1 to the masses and form a broader connect with fans in India," Suvrangsu Mukherjee, managing director of Total Sports Asia, said, adding that Mallya knows about lifestyle marketing through sports association.
Shailender Singh, joint managing director of Percept, said, "This is a progressive move. The success and progress for the team would lie in synergies between the two owners. There was no better time than this to announce this deal as F1 is around the corner."