JSE-listed private equity investment company Cycad Financial Holdings has paid R15.2 million to fund the acquisition of a 15% stake in Irish-registered sports e-commerce company eGolf.
The funding has been advanced to a special purpose vehicle and the return generated for Cycad will depend on the performance of the vehicle`s investment in eGolf, Cycad says.
Cycad CE Leonard Fine has been appointed to the eGolf board and the South African company has committed another R15.45 million for the purchase of an additional 10% of eGolf on 1 May.
Fine says Cycad`s investment strategy is to invest in high-growth service businesses with intellectual capital.
"eGolf gives Cycad shareholders access to a truly international business operating in the leading edge of technology change. The Internet is the medium of the future," he adds.
eGolf, which will launch in the northern hemisphere summer, is being set up as a global sports e-commerce initiative focused on golf and related activities.
Headed by Tim Wright, formerly senior vice-president at IMG Group, eGolf will operate out of London, and plans are underway to list the company on an international exchange within the next two years.
Cycad says the golf portal`s revenue will be generated through golf shopping, golf travel, golf tuition, gaming and betting, advertising, and tee reservations.
Cycad says there are more than 50 million golfers worldwide, 19 million of whom spend $730 million online each year on golf and related activities.
The portal provides services "to a clearly defined affluent target market of Internet users," it adds. "The business has very strong growth potential in an industry where its competitors are mainly locally- or regionally-based."
Cycad says Internet use is expanding very rapidly and online golf spending is forecast to grow faster than the average online growth.
eGolf will be marketed and promoted in the US, Europe and Asia by CNBC Sports, which markets such golfing events as the World Cup of Golf, The South African Open, The Malaysian Golf Open, The Asian Nations Cup, The Scottish Golf PGA and The Ladies Irish Golf Open.
CNBC Sports holds a 40% stake in the portal, with venture capital fund Netvest.com owning 15%.
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