Raine Group made international headlines earlier this year when it brokered the sale of Chelsea Football Club after former owner Roman Abramovich put the club on the market in anticipation of UK government sanctions on Russian oligarchs.
Before the deal was made final to a consortium led by American financier Todd Boehly, Raine co-founder Joe Ravitch was quoted as saying that the next owner of the English club would be “getting it for a steal”. He estimated that Chelsea and other top Premier League clubs would be worth over US$10 billion ($14.3 billion) in five years.
If true, the Boehly group, which paid GBP4.3 billion ($6.6 billion) for the football club, is sitting on a cash cow. Ravitch’s rainmaking deal history gives little cause to doubt this prediction.
Raine, a boutique merchant bank that specialises in investing in technology, media and entertainment, as well as telecommunications, has advised on a number of headline-grabbing deals. These include Netflix’s golden ticket acquisition of the Roald Dahl Story Company for a reported GBP500 million and the merger of US telcos T-Mobile and Sprint.
The firm has also had experience with trans- actions in Singapore, advising Grab Holdings on its merger with Uber Southeast Asia in 2018, as
well as the sale of Singapore-based Asian Food Channel to American television network E W Scripps in 2013.
Raine established its Singapore office in September just this year, a move that Ravitch told The Edge Singapore in an interview had
long been on the cards but one that needed the “right timing”.
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Ravitch, whose name forms the first half of the portmanteau Raine — the latter half comes from one of the four other co-founders Jeff Sine — started working in Singapore and Asia almost 30 years ago. He says that his early experiences “endeared” him to the city-state, even though this includes the “calamitous” deal he attempted to put together for Singapore Telecommunications (Singtel) to bid for Hong Kong Telecom back in 2000. Pacific Century Cyberworks, headed by Richard Li, son of tycoon Li Ka-Shing, prevented that from happening.
“We had always thought about Singapore based on a lot of work and the original relationship that I built with Temasek in the 1990s,” recalls Ravitch, referring to Singapore’s state-owned investment agency that is the controlling shareholder of Singtel.
“We were able to reconnect with Temasek, which has been an investor in our funds since we started Raine. But I think there are a couple of very specific reasons as to why we felt that now is the time to open an office here,” he adds.
The Singapore-Hong Kong rivalry to become Asia’s premier economic hub has been playing out till today. One reason for Ravitch to open an office here is to capture the exodus of capital and labour from Hong Kong, a not-insignificant proportion of which arrived on Singapore’s shores.
“In almost 30 years of working in Asia, there was always this Hong Kong-Singapore rivalry — and I feel like a winner has been declared finally,” Ravitch says. “By putting an office here, we’re trying to hit that peak state of competence in the region and the future of the Asean region with Singapore as its hub.”
“We play for growth,” he emphasises. “We never get involved in distressed situations and we never use debt money in our investments. The focus is entirely on finding business to advise and invest in.
“It’s not about yesterday’s market. It’s about tomorrow’s.”
Asean ‘more attractive’ than other regions
The way Ravitch sees it, Raine’s “competitive edge” comes from three key elements that allows it to “punch above [its] weight”.
The first is a strong embedded culture in the firm that sees global collaboration across its various offices. Next is Raine’s niche, its tight industrial focus allowing the boutique firm to differentiate itself in the media and entertainment space from larger funds. Finally, there is Raine’s merchant banking model which Ravitch believes has been a significant part of its “recipe for success”.
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“Our whole premise is being very tightly focused around investing and advising in the digital media, sports, entertainment, gaming and music industries. We want to be narrow and deep — we don’t want to be broad,” he explains, adding that the Raine team works together on a global basis and that the companies it invests in should also be “susceptible” to operating globally.
Although Raine is structured as a merchant bank, one of the ways in which it differentiates itself from an advisory perspective is its ability to find capital and investors from all over the world, as well as to represent companies in finding investors, shares Ravitch.
“It doesn’t matter if we’re raising money for a company in Asean or a company in China or a company in the US — one of our advantages is being able to tap into a global investor base,” he says.
According to the former senior partner at Goldman Sachs, the power of the rising consumer in Asia is “the story of the 21st century” — and with the challenges the world is facing in China, the Asean region makes it “more attractive” than other areas.
“To me, it’s fascinating because it’s the last major market of the world where the Chinese giants and the American giants will go head-to-head — it’s the final place where Tencent and Alibaba will compete against Google and Facebook,” says Ravitch.
The way he sees it, Asean has “indigenous” capital, a giant and fast-growing consumer base and, significantly, high mobile phone penetration — a characteristic that has developed more recently with the increased purchasing power of emerging markets.
“The mobile phone has obviously created a revolution where there’s a digital economy, which has become much more meaningful. There are companies that are very exciting and would broadly penetrate the whole monetisation ecosystem of content and commerce,” Ravitch explains.
He shares that Raine received a “big stimulus” in India when Mukesh Ambani spent US$50 billion to build out a 4G network across the entire country and gave away 75 million smartphones, transforming the entire “digital consumption ecosystem”.
Asean-6 — comprising the six largest economies of Southeast Asia: Indonesia, Thailand, Malaysia, Singapore, the Philippines and Vietnam — has achieved explosive growth in digital connectivity in the last several years. By 2019, the six countries had reached Internet penetration, social media penetration and mobile connectivity of 65%, 63% and 132% respectively.
Industrial opportunities galore
With the evolved digital environment in mind, Ravitch believes that there are “a hundred different reasons” for entertainment opportunities in the region. While Minister for Transport S Iswaran was the Minister Trade and Industry from 2015 to 2018, he put together a media advisory council that Ravitch has been part of.
Ravitch says: “I’ve long been preaching the thesis that as all of the major technology companies come into Asean to build their streaming platforms, they can’t just come in with Hollywood content. The important thing is to create and be able to produce local content as they have in other markets.”
“If you look at the Asian market — not just the Asean market — Disney, Netflix, Viacom, many of the big platforms are already headquartered in Singapore,” Ravitch notes, adding that Singapore is the “perfect place” to be.
He says that he has always been of the view that Singapore should create an ecosystem around media and content production and digital content in the country, a process that would be expedited by larger platforms committing to a certain amount of production in the city-state in exchange for Singapore providing a base of production for regional entertainment.
Ravitch says he still thinks this could happen, and if Singapore gets its industrial policy “right”, it will be a huge opportunity for entertainment in the region.
Raine’s opportunities for growth in Asean are not limited to the digital media landscape. Referencing his sale of Chelsea earlier this year, Ravitch points out that there are more Chelsea fans in Southeast Asia than in the UK. The same goes for the rest of the Premier League “big six”.
He believes that there should be better ways of monetising the massive supporter base already present in the region, which will create more sporting opportunities for investors. Ravitch was involved in bringing the National Basketball Association (NBA) to China in the 2000s and more recently helped put a deal together between the NBA and Abu Dhabi, which will see the UAE capital city become the regional centre for basketball in the Middle East.
“The NBA will play pre-season exhibition games every year with teams going to Abu Dhabi; they’re sending trainers and coaches and building new facilities,” he says. “There’s no reason — I hope — why Singapore couldn’t do something like that with the NBA as well, or other leagues and clubs.”
Singapore as ‘hub’ for regional growth
In Singapore, Raine will similarly tap into its regional investor base and to the “substantial” regional market. Ravitch sees Singapore as a hub for Asean, and as such, investments in the country are also an investment for the wider economic region.
Already, Raine has transferred co-founder and partner Deborah Mei to Singapore from its Shanghai office where she led the firm’s China practice and has been involved in all of the firm’s advisory transactions where a Chinese company is a counterparty.
Mei is in the midst of building a team with regional expertise that is both “local and global”, like Raine’s teams across other markets. Bloomberg reported on Sept 19 that Jonathan Pflug, head of Southeast Asia mergers and acquisitions at Morgan Stanley, would be leaving the US bank to join Raine’s office in Singapore.
For Mei, who has been based in Asia, also with Morgan Stanley before Raine’s inception, she believes her background will allow her to bring in the “culture and ethos” of Raine to the Southeast Asia region. Her understanding of capital flows from North Asia, in China and Korea, to Singapore and Asean is what she “brings to bear” for Raine.
Although Raine has mostly been involved in advisory roles in Singapore, the plan for its office will be the same as what Raine has done across its eight other global offices. “Ultimately, we hope to have the merchant banking model in Southeast Asia, based in Singapore, and we will start out with corporate finance advisory,” says Mei.
She adds that Southeast Asia’s demographic makeup with one of the youngest and fastest-growing populations in the world, as well as the amount of time the region spends on digital screens, provide a platform for growth that was not around only a decade ago.
“A lot of the elements that weren’t here a number of years ago — the presence of payment and delivery platforms, the comfort with digital usage which increased with Covid-19 bringing more people online, and the massive figures for time spent online in the region — these are the infrastructure that makes opportunities possible,” Mei says.
From gaming to music, video content and sport or otherwise, she sees Southeast Asia as brimming with investment opportunities, just like “China 10 years ago”.
Mei says: “It’s been a pretty remarkable 10 years [for China] and we’re looking to see a similar outcome in this part of the world.”
