BlackRock, investors buy $1.6 billion stake in F1-sources

  • Other Sport
  • Tuesday, 22 May 2012

SINGAPORE/HONG KONG (Reuters) - Private equity firm CVC Capital has sold a $1.6 billion stake in Formula One to three investors including BlackRock ahead of the motor racing company's planned $3 billion initial public offering in Singapore, sources said on Tuesday.

The deal sets a benchmark valuation of at least $7 billion for the company as financial advisers begin to target potential cornerstone and retail investors during the pre-marketing process of the IPO. The shares are expected to debut in June.

The pre-IPO deal cuts CVC's stake in Formula One to about 40 percent from 63.4 percent, one of the sources s aid. The two other investors are asset manager Waddell & Reed and Norway's Norges Bank Investment Management, the asset management unit of the Norwegian central bank, known as Norges Bank.

"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," said Peter Elston, head of Asia-Pacific strategy and asset allocation at Aberdeen Asset Management's Asian unit.

Finance Asia, which earlier reported the pre-IPO deal, said the transaction gives Formula One an enterprise value of about $9.1 billion including $7.2 billion of equity and $1.9 billion of debt.

"We view this (pre-IPO deal) as a validation of the company's valuation," the source told Reuters.

Goldman Sachs, UBS and Morgan Stanley are lead-managing the IPO, which could be Singapore's biggest IPO since Hong Kong billionaire Li Ka-Shing's Hutchison Port Holdings Trust raised $5.5 billion in early 2011.

Another Southeast Asia listing, Malaysia's Felda Global Ventures Holding, plans a $3 billion IPO this year. Facebook Inc raised $16 billion last week in a record Internet IPO.

The IPO is the long awaited public floatation of a franchise led by octogenarian billionaire Bernie Ecclestone, the white-maned, colourful Briton of modest upbringing who was once a race car driver himself.

Officials with investment manager BlackRock declined to comment and officials at Norges Bank and Waddell were not available for comment.

The F1 IPO is set to be priced before the end of June after the company and its bankers meet with investors and fund managers to gauge demand for the offering.

"I don't think it's going to be priced cheaply," said Roger Tan, chief executive of SIAS Research. "There's a brand premium to it."

Formula One would join British luxury jeweller Graff Diamonds in braving equity markets despite a slump in global stocks.

IPOs had their worst start in about four years in the Asia-Pacific region with overall equity market activity down about a fifth from 2011 as investors fretted at buying new shares because of falling markets.

MSCI's index for Asia ex-Japan has fallen about 9 percent over the past month on concerns over slower growth in China and the fallout from Europe's debt crisis. A source close to the Formula One deal said on May 12 the IPO could be delayed because of the ongoing market jitters.


Formula One could have its B+ long-term debt ratings lifted one notch after the IPO because of an expected improvement in its debt profile, Standard & Poor's said in a May 15 report when it put the company on "positive" watch.

The decision "mainly reflects our view that after the IPO in the next two to three years, Formula One's adjusted leverage is likely to lessen significantly and durably and that private equity sponsors will exit Formula One's capital in the medium term," S&P said in the report.

Formula One earlier this month unveiled a $1.

(Additional reporting by Charmian Kok; Editing by Matt Driskill and Michael Flaherty)

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