Formula One Said to Seek $450 Million for Itself in Asia IPO

Formula One plans to raise about $450 million for itself by selling new shares as part a $3 billion initial public offering in Singapore, said two people with knowledge of the matter.

The IPO may raise $2 billion to $3 billion in total as existing shareholders sell stakes, the people said, declining to be identified because the information is private. Investors in Formula One’s IPO will own a so-called stapled security consisting of equity and a loan unit, the people said.

Formula One’s existing investors currently hold the loan, which pays an annual coupon of about 10 percent, one person said. Borrowing from shareholders helps Formula One keep its tax bill low, the person said.

The IPO may be Singapore’s largest since February 2011, according to data compiled by Bloomberg. The company and its bankers are reaching out to institutions this week and next as it plans to allocate part of the IPO to so-called cornerstone investors, the people said.

CVC Capital Partners Ltd., Formula One’s main shareholder, sold 21 percent of the company to Waddell & Reed Financial Inc. (WDR), Norges Bank Investment Management and BlackRock Inc. (BLK) for $1.6 billion, the private equity firm said on May 22. Waddell & Reed invested $1.1 billion, while Norges Bank and BlackRock bought $300 million and $200 million respectively, one of the people said. UBS AG (UBSN) advised CVC on the stake sale, which valued Formula One at $7.2 billion, said the person.

A spokesman for CVC wasn’t immediately available for comment. An outside spokeswoman for Formula One declined to comment on details of the IPO. Dow Jones reported earlier today that the company was using a stapled security, citing people it didn’t identify.

CVC Buyout

CVC bought 63.4 percent of Formula One in 2005 and 2006 using $2.5 billion of loans. The buyout firm is taking Formula One public after leading racing teams Ferrari, Red Bull and McLaren agreed to new terms through 2020.

Other shareholders include the administrators of bankrupt Lehman Brothers Holdings Inc., which may sell its 15.3 percent stake with the IPO, and Bernie Ecclestone, chief executive of Formula One who holds 5.3 percent. Ecclestone’s ex-wife Slavica owns 8.5 percent through Bambino Holdings Ltd.

Goldman Sachs Group Inc. (GS), UBS and Morgan Stanley (MS) are lead managers for the IPO, said the people. DBS Group Holdings Ltd. (DBS), CIMB Group Holdings Bhd (CIMB) and Banco Santander SA (SAN) will also be bookrunners for the offering, they said.

To contact the reporters on this story: Zijing Wu in London at zwu17@bloomberg.net; Elffie Chew in Kuala Lumpur at echew16@bloomberg.net; Fox Hu in Hong Kong at fhu7@bloomberg.net

To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net; Jacqueline Simmons at jackiem@bloomberg.net

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