Manchester United Said to Plan $1 Billion Initial Share Sale in Singapore
Manchester United plans a $1 billion initial public offering in Singapore, two people familiar with the matter said, as the record 19-time English soccer champion seeks to cut debt that has fueled fan protest.
Credit Suisse Group AG (CSGN) is working on the transaction, which may take place this year, said the people, who declined to be identified because they weren’t authorized to speak publicly. The Premier League team had been considering Hong Kong for the IPO but now favors Singapore, although no final decision has been made, the people added. United is ready to sell about 25 percent, one of the people said.
United, examining ways to reduce its financing costs and raise money that could be used to buy players, is drawing on the sport’s rising popularity in a region where it has about 190 million fans. A listing by United would mark a victory for Singapore, which is competing with Hong Kong to attract initial public offerings by European companies.
“It’ll be a good coup for the Singapore Exchange,” said Christopher Wong, a Singapore-based senior investment manager at Aberdeen Asset Management Asia Ltd., which oversees more than $90 billion of regional equities. “Manchester United is an iconic eye-catching brand in this part of the world, and it’s probably just capturing that momentum because this is where growth is coming from.”
Phil Townsend, a United Spokesman, said the club doesn’t comment on speculation. Credit Suisse spokeswoman Vanessa Neill declined to comment.
United wants to acquire players that can help it fend off the challenge of clubs including Manchester City, owned by Sheikh Mansour bin Zayed Al Nahyan, and Chelsea, owned by Russian billionaire Roman Abramovich.
Fans have protested against the team’s U.S. owners, the Glazer family, even though United has picked up four league titles and a European Cup since they bought the team in 2005. The club spends about 45 million pounds a year to service a 500 million-pound bond. The bond, which matures in 2017, replaced bank debt required for the purchase. That money could be used to buy players and reduce ticket prices at the previously debt-free club, according to some supporters.
In March, the team’s parent company, Red Football Joint Venture Ltd., announced a record 104.7 million-pound ($170 million) fiscal-year loss because of costs related to swapping a long-term bank loan for the dollar and sterling bond last year and on lower income from player sales.
‘Smoke and Mirrors’
The Glazers, who also own the National Football League’s Tampa Bay Buccaneers, bought United for 790 million pounds. Forbes magazine estimates the team is now worth $1.8 billion, while it was third behind Real Madrid and Barcelona in Deloitte LLP’s list of the richest soccer clubs by revenue, published in February. Seeking $1 billion for as little as 25 percent values the business at about double its real worth, said one banker who specializes in soccer finance.
“They are betting they will get a higher valuation in Asia based on smoke and mirrors rather than facts,” said Stephen Schechter, chief executive officer of investment bank Schechter & Co. in London. “I think it’s worth probably half of what they’re looking for.”
As well as the 500 million-pound loan secured against the team, the ownership also had a 220 million-pound payment-in-kind loan that accrued interest of as much as 16.3 percent. The owners paid off the lenders in November, although neither the club nor the Glazers have said how the loan was repaid.
United says it’s the most-supported team in the world, with a club-sponsored survey revealing a global following of more than 330 million. The Glazers’ commercial operation, led by former J.P. Morgan banker Edward Woodward, has secured global sponsorship and licensing agreements that have led to annual revenue doubling to about 300 million pounds in six years.
The club has chosen Asia for its IPO because of its popularity in the region, one of the people said. The team has fan clubs in countries such as Thailand, Singapore and South Korea and a supporter base there of 190 million. It’s been searching for real estate in the region in an effort to boost its commercial operations.
Singapore boasts Asia’s highest concentration of millionaires and a United-themed restaurant. The Manchester United Singapore Supporters Club has 2,000 registered members, up from 50 in 2007, according to its website.
Peter Lim, a billionaire from Singapore, in October offered 320 million pounds for Liverpool, the soccer team that finished sixth in the last Premiership season. He later pulled the offer, saying Liverpool’s board wouldn’t talk to him.
“The multitude of local events we run with global and local partners, and a prospective forthcoming tour of Asia in 2012, necessitate expanding our footprint both with people and office space,” United said in a statement earlier this month. “This is consistent with the huge appeal of Manchester United in the region, borne out of nearly 40 years of visiting.”
In 2009, United sold Portuguese forward Cristiano Ronaldo to Real Madrid for a world-record 80 million pounds. That helped boost its cash surplus to more than 100 million pounds. It’s spent about 30 million pounds of that in the past two quarters buying back some of its bonds.
Manager Alex Ferguson spent more than 50 million pounds in the latest offseason to recruit Spanish goalkeeper David de Gea, Blackburn defender Phil Jones and Aston Villa winger Ashley Young. The team opened the defense of its league title with a 2- 1 win at West Brom three days ago.
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