All-rounder Watson was in high demand in Saturday's auction for the cash-rich tournament, the ninth edition of which will be played from April 9 to May 29.
"Incredibly excited to join such a great franchise. Looking forward to joining up with my new team mates in April," the 34-year-old said on Twitter.
Watson will join a Bangalore team boasting power-hitters Chris Gayle, AB de Villliers and Virat Kohli as well as Australia fast bowler Mitchell Starc.
Aaron Finch, Australia's captain in the shortest format, went unsold in the first round but was picked up by Rajkot at his base price of 10 million rupees ($147,000) after being invited back in the auction.
In-form New Zealand opening batsman Martin Guptill was also unsold in the first round of auction for marquee players.
South Africa fast bowler Chris Morris, valued at 5 million rupees, fetched 70 million from Delhi after three franchises showed interest in him.
Delhi won another bidding war for West Indies all-rounder Carlos Brathwaite for 42 million and England wicketkeeper batsman Jos Buttler went to Mumbai for 38 million.
Pune, to be led by India's limited-overs captain Mahendra Singh Dhoni and coached by former New Zealand skipper Stephen Fleming, outbid fellow newcomers Rajkot to land Pietersen for 35 million rupees.
Pune and Rajkot were unveiled as the new teams in the Twenty20 competition, replacing Chennai and Rajasthan who were suspended for two years for their role in an illegal betting scandal.
All-rounder Pawan Negi, who was named in India's World Twenty20 squad on Friday, attracted the highest bid among Indians and was bought by Delhi for 85 million rupees.
India all-rounder Yuvraj Singh, who fetched 160 million rupees at last year's auction, will play for the Hyderabad franchise after being bought for 70 million.
(Reporting by Sudipto Ganguly; editing by Ed Osmond)
Share
