Formula One Revving Up For IPO In Singapore

March 22, 2012Sports Industryby EW News Desk Team


Formula One (F1) motor racing series’ owners, CVC Capital Partners, are considering a partial flotation of the business on the Singapore stock exchange, which could raise anywhere between $1.5 billion to $10 billion for the company.

Over the weekend, Britain’s Sky News was the first to report that CVC, the majority stakeholder in F1 with 63.4 percent of shares, had approached US financial firm Goldman Sachs in order to examine the possible placement of some F1 shares with a new investor as a precursor to a formal IPO in Singapore.

The UK based private equity firm also contacted officials from Singapore’s sovereign wealth fund, Temasek Holdings, to enquire if they were interested in purchasing a stake in their share, though neither party commented on the outcome.

During an interview with Reuters on Wednesday, F1 CEO Bernie Ecclestone told reporters that he had previously recommended Singapore to CVC as a location for a flotation of the business, though CVC had yet to make a final decision.

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"That's what I've proposed to them (CVC),” said Ecclestone, who requested that any further queries be directed to CVC.

According to a separate Reuters source, CVC, which acquired majority control of F1 in 2006, would still want to continue as the long-term holder of the F1 business, with the option being explored only for just part of the company.

Still, a minimum 15 percent float in Singapore could raise as much as $1.5 billion for the company, with the business said to have a potential value of over $10 billion.

If the deal comes to fruition, F1 could also become the second major sporting institution that has considered putting up a partial flotation in the Singapore stock exchange, with English football club Manchester United receiving permission to file an IPO in the asian country last year.

While plans for a Manchester United IPO were eventually put on hold due to volatile international market conditions, sources at the club suggest that the deal would still ultimately go through, though no timetable was set.

Related: Manchester United Plans US$1 billion IPO in Singapore

The F1 racing series has an annual sales revenue of 1.17 billion euros ($1.55 billion), according to CVC’s website.

F1's revenue for the current season, which began at the Australian Grand Prix on Sunday, will reach $2 billion for the first time, noted industry monitor Formula Money.

“F1 has good branding and strong market share, and they are probably one of the few players that could do racing events to their kind of scale. That would probably put them on a better foothold compared to Manchester United,” said Ng Kian Teck, a lead analyst at SIAS Research in Singapore.

“At the end of the day, it (the success of the IPO) depends on their profitability and whether they can generate returns for shareholders," added Ng.

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