Football clubs set to flood on to the market as rules relax
Leicester City, the Premier League club which won the Coca-Cola Cup last season, yesterday set the ball rolling by confirming it planned to float by reversing into Soccer Investments, the quoted cash shell created by venture capitalist group Apax Partners. The combined group will be valued at pounds 35m.
Apax plans to bring at least one more big-name football club to the market before the start of the football season next month. Domestic targets are understood to include two Premiership teams, West Ham and Derby, and the First Division promotion hopefuls, Wolverhampton Wanderers and Manchester City. Apax has also had talks with several leading European clubs thought to include Atletico Madrid, the Spanish club which recently signed Brazilian midfield ace Juninho for pounds 12m, Dutch club PSV Eindhoven, currently owned by electronics giant Phillips, and leading Portuguese club Benfica.
"We are considering European Soccer Investments. We certainly have a lot of interest from clubs and investors," a spokesman for Apax said yesterday.
This could be just the tip of the iceberg. Several other European clubs have advanced plans to float in the UK, according to industry sources. Italian footballing giant AC Milan recently appointed NM Rothschild to advise on its flotation. Other clubs considering floating in London include Inter Milan and Bologna, the Italian rivals, Betis, one of the largest clubs in southern Spain, and Oporto and Sporting Lisbon of Portugal .
"There is likely to be a flood of European football clubs coming to the UK in the near future. The AIM market is attractive to these clubs as it does not require them to have a three-year profit record," said Tony Fraher, head of a specialist football fund run by investment bank Singer & Friedlander.
Under Premier League rules investors who own a large stake in one team are not permitted to own more than a 10 per cent holding in another club. However these rules look set to be relaxed, paving the way for a host of domestic flotations.
"A working party is looking into this and may well decide to raise the level higher than 10 per cent," said a Premier League spokesman. The Football League, which looks after the UK's lower footballing divisions, looks set to follow suit.
Investment funds have already been told informally that they can breach the 10 per cent limit so long as they clear it with football authorities first, according to industry sources.
Leicester City had one of the most successful seasons in its history last year under the inspirational leadership of Irish manager Martin O'Neill, finishing in the top half of the Premier league and lifting the Coca-Cola cup. It will use the pounds 10m already raised by Soccer Investments to buy new players and expand its stadium, increasing the capacity of Filbert Street from 22,500 to 31,000 spectators.
Soccer Investments floated on AIM last April, vowing to sign up a Premier League team by the start of the season. Its four directors, including Alan Hansen, the Liverpool football player turned TV pundit, stand to make a large profit from the Leicester deal. They were each awarded 10,000 share options on becoming directors. These could be worth upwards of pounds 20,000 each if, as analysts believe, Leicester is valued at around pounds 50m when it starts trading on AIM.
Soccer Investment's shares were suspended at 110.25p yesterday pending its acquisition of Leicester City.
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