Investment groups rev up Formula One float
Wednesday 23 May 2012
Formula One's share flotation rolled on to the starting grid yesterday as venture capitalist CVC sold a $1.6bn (£1bn) stake in the business to three investment groups including BlackRock.
That makes Formula One worth at least $7bn with bankers suggesting that the share offering next month could raise up to $3bn on the Singapore stock market.
The deal is reported to have cut CVC's stake from 63.4 per cent to around 40 per cent. Alongside BlackRock, the pre-initial public offering (IPO) sale saw US fund manager Waddell & Reed and the investment arm of Norway's central bank buy shares.
"It raises some capital, which may be required, and it gives the IPO a little bit more credibility if some well-known investment houses come on board pre-IPO," Peter Elston, the head of Asia-Pacific strategy and asset allocation at Aberdeen Asset Management, said.
Including its $1.9bn of debt, Formula One has an enterprise value of more than $9bn.
The credit rating agency Standard & Poor's said Formula One could have its long-term debt ratings lifted one notch from the current B+ after the IPO, on the assumption both its borrowings and the involvement of private equity firms will fall over the next two to three years.
Bernie Ecclestone, the man behind Formula One, is likely to play a prominent role in the roadshows for the share offer.
He will highlight the growing value of live sports rights and the burgeoning fan base for Formula One in emerging markets.
Marketing of the IPO to both institutional and retail investors began this week. Goldman Sachs, UBS and Morgan Stanley are leading the share sale.
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