CVC Said to Tap Goldman Sachs to Study IPO of Formula One
CVC Capital Partners Ltd. hired Goldman Sachs Group Inc. (GS) to explore a possible sale of a stake in Formula One in an initial public offering, said a person with knowledge of the matter.
Any deal to sell part of CVC’s 63.4 percent holding may value the auto-racing series at more than $10 billion and Singapore is a possible listing venue, the person said, declining to be identified as the deliberations are private.
An IPO by Formula One would be a boost to Singapore, which is vying with Hong Kong to attract companies from across the world seeking to capitalize on Asia’s growing economies. Formula One Chief Executive Officer Bernie Ecclestone said he would remain in his position under CVC’s plans.
“That’s the intention: business as usual,” Ecclestone, 81, said in a phone interview. Ecclestone said he has no plans to sell his 5.3 percent stake.
Ecclestone, who has owned or managed the sport’s commercial unit since 1995, is negotiating with teams over terms that expire after this year and according to Sky News has offered Ferrari SpA and Red Bull GmbH’s entrants as much as $45 million to sign up through 2020.
Ecclestone said it’s “not really” necessary for the negotiations with teams to be concluded before a share sale and there was no deadline for the talks. He declined to say if any of the 12 teams had agreed to new terms.
“We’re in the middle of sorting that out,” Ecclestone said. “It’s always the same with these long-winded things but it will get sorted out.”
Sky News reported yesterday that CVC hired Goldman Sachs to study a placement of part of its stake in Formula One. Spokespeople for CVC and Goldman Sachs declined to comment on the possible IPO.
Manchester United Ltd. (MNU), the record 19-time English soccer champion, may revive a Singapore IPO, people familiar with the matter said this month. A Formula One share sale will enhance “brand Singapore,” according to Christopher Wong, a Singapore- based senior investment manager at Aberdeen Asset Management Asia Ltd., which manages more than $87 billion in assets in the region.
“Listing it in Singapore appeals to the growing popularity of the sport in this part of the world, which is driving the growth of F1,” Wong said.
CVC bought Formula One in a leveraged buyout in 2005 and 2006 using $2.5 billion of loans. Other shareholders include the administrators of Lehman Brothers Holdings Inc. who hold 15.3 percent and Ecclestone’s former wife Slavica who owns 8.5 percent through Bambino Holdings Ltd. The series has annual sales of 1.17 billion euros ($1.55 billion) and employs 200 people, according to the CVC website.
News Corp. and the Agnelli family’s Exor SpA expressed an interest in buying CVC’s stake last year, although analysts said a phone-hacking scandal that closed News Corp.’s News of the World tabloid had pushed a possible bid down its agenda.
Formula One added India to its racing circuit last year and also holds Grand Prix races in China, Malaysia, Japan, Korea and Singapore. The 2012 season began two days ago with the Australian Grand Prix in Melbourne.
Formula One may be drawn to a Singapore listing because of the city-state’s efforts to cultivate itself as a destination for wealthy individuals, Aberdeen’s Wong said.
“Singapore has created this whole ecosystem around private banking, wealth management, the integrated resorts, arts and culture for the rich and famous,” he said.
Singapore began staging a Formula One race in 2008. The government supported the event as part of a goal to boost tourism. The race contract ends this year and Singapore hired consultants to assess its impact on the city-state’s economy, the Straits Times reported in September.
Singapore’s exchange is vying with Hong Kong for brand-name listings as Europe’s credit crisis deters companies from going public there. Hong Kong hosted IPOs by Prada SpA and Samsonite International SA last year.
Manchester United received the Singapore stock exchange’s approval in September to raise about $1 billion in an IPO, people with knowledge of the matter said at the time. The process then stalled as volatile stock markets made equity sales more difficult to pull off, bankers said.
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