Posted on February 9, 2011
Williams share sale launched today: team worth £250 million | James Allen on F1 – The official James Allen website on F1

Today in London Williams will launch its share scheme to the media and the City.

The bulk of the shares on sale belong to Patrick Head, who is obviously looking to release the equity he has held in the team since the late 1970s and will semi-retire.

He will remain a director of Williams and of Williams Hybrid. Reuters reports that merchant bankers expect the stake to raise in the region of $50 million (£35 million). Frank Williams and Toto Wolff are holding their shares and are in for the long haul.

Williams hopes to sell up to 27.39% or 2,739,383 existing shares at between €24 and €29 each, valuing the company at around £250 million.

According to the prospectus, “(The) IPO positions Williams F1 for the future, providing a more sustainable ownership structure that will support its growth as an independent constructor. (The) offering follows three years of profits and a net cash position of £24.8m as at year-end 2010

The offering is expected to begin on 9 February 2011 and is scheduled to conclude on or around 28 February 2011. The first day of trading on the Frankfurt Stock Exchange is expected on 2 March 2011.

Williams has been working closely with the Qataris in recent years and if anything it was expected that they would take a stake in the team. One wonders whether the decision of FIFA to grant Qatar the 2022 Football World Cup derailed that plan and prompted the rethink which led to flotation.

The Williams floatation is being closely monitored in F1 and wider sporing circles. With F1 expenditure more stable due to the Resource Restriction Agreement and revenues growing all the time, a successful sale could illustrate that investors now consider an F1 team to be a proper business rather than a vanity or emotional investment.

There are also suggestions that FIAT may be thinking of a floatation for Ferrari. The company recently bought back the shares held by Abu Dhabi’s Mubadala Corporation.

Germany was chosen for the Williams IPO because the level of disclosure is lower so confidential FOTA and FOM information relating to the Concorde Agreement will not be revealed.

Bernie Ecclestone said, “We want more Franks and Patricks. If I could buy shares in the Company I would.”

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Williams share sale launched today: team worth £250 million
46 Responses

  1.   1. Posted By: Alex W
        Date: February 9th, 2011 @ 9:40 am 

    I would love to buy a few shares, but how do they make $$$? What return are they predicting?
    Profit = Sponsorship dollars + Prize money – costs. Prize money is secret, sponsorship dollars varying, and as we know the costs are high, you can’t cut back there…. interesting…

    [Reply]

    Rich Reply:

    I am inerested in buying some shares. Maybe between £600 – £1000 worth. Could someone explain how this works and if it is worth doing?

    Rich

    [Reply]

    Robert McKay Reply:

    And if they’re making profit, why isn’t that going back to the race team budget for the next season so they can finish up higher, win more prize money and attract better sponsors?

    [Reply]

    Jo Torrent Reply:

    Very bad move from Williams, as usual I should add. F1 teams have never been a source of income for nobody and that has been true for 60 years now and I won’t believe that they will make money unless I see it happen for a few years.

    If someone were to invest for the sake of making profit, I will highly recommend to avoid sport related companies. As happened with many football clubs in the past their introduction in the flotation was disastrous because success in sports can’t be bought by money and there’s a huge uncertainty for an investor. With Williams, you might argue there’s a certainty you won’t win anytime soon but still you can step back even further.
    Besides, F1 is unpredictable with changing rules all the team and political tensions every now and then (FOTA/FOM-FIA). Unless the next years show that the enforcement of cost cuttings is efficient and that teams can squeeze more out of Bernie, the move will prove disastrous. Even then I feel that most teams will find a way to spend more money. As they manage to find loopholes in the technical rules, they’ll find a way around budget restrictions. Final point of instability in F1, what will happen once Bernie is no longer there ? All these are uncertainties hard to undermine. Good luck to Williams anyway.

    In Ferrari case, it’s the whole car company that is concerned which is completely different as Ferrari is a profitable car manufacturer.

    As you raised the Qatar Williams link earlier, I’m quite surprised honestly that they haven’t moved with enough will to secure a GrandPrix there. In my opinion, if any Arabic country has to organize a GrandPrix, it is Qatar. They are the richest or 2nd richest Arabic country with the smartest ruling family by a huge margin. They’re the ones behind AlJazeera News Network and AlJazeera Sport the biggest sport Network in the Arab World (260 millions market). They managed to secure WorldCup 2022 to the regret of many. Politically they’re very active for a tiny country succeeding in peace talks in Sudan where Egypt and USA failed and managing to play active political role both in Palestine and Lebanon.

    Unless Qataris are uninterested the Bahrain GrandPrix should move to Qatar sooner or later. Bahrain might suffer political protests as well as the Shiia majority there is ruled by Sunni minority and is banned from police or military forces as far as I know. I don’t know how risky is the situation there right now but it might follow in the footsteps of Tunisia and Egypt.

    [Reply]

    dave mingay Reply:

    The floatation represents an influx of investment capital which is not for spending on running costs, i.e. to replace sponsorship. Shareholders would take a dim view of such an action.

    [Reply]


  2.   2. Posted By: jonrob
        Date: February 9th, 2011 @ 9:53 am 

    Still think it’s a big mistake which leaves the team vulnerable to speculators. Anyone know if naked shorting is allowed in the DAX?

    [Reply]

    ian Reply:

    Not sure it has any value to ‘speculators’ as Sir frank has majority stake.

    [Reply]

    Monad Reply:

    Yeah, actually they Patrick and Frank just get money for themselves without risk of the company changing hands since he still holds a more that 50%.
    No matter how much shares on the Stock Exchange you buy, you won’t be able to tell Williams what to do.

    [Reply]


  3.   3. Posted By: kowalsky
        Date: February 9th, 2011 @ 10:07 am 

    what does it mean. If i could i would? Of course he can. Every time bernie opens his mouth, he’s got an agenda. It’s becoming pretty boring.

    [Reply]

    Alex Reply:

    Insider trading or something? Presumably a significant amount of Williams’s income comes from Bernie as the Commercial rights holder. In theory he might be able to take advantage of relative share values or influence because of his awareness of what the team might or might not receive as income.

    [Reply]

    Bob Reply:

    Think he means he prohibited from buying as he is conflicted out through his interest in FOM

    [Reply]

    ian Reply:

    I think he would either not feel it correct to invest in one of the teams, or in fact may not be allowed to.

    [Reply]

    Philip Reply:

    James, can you comment on this?

    I wasn’t sure if he was talking about conflicts of interest, or just having a laugh about how poor he is…

    [Reply]

    Jarred Reply:

    I believe Bernie and other members of the FIA are not able to hold investments in any companies that are involved in F1 be it teams, sponsors, suppliers. Due to conflict of interests and/or insider trading

    [Reply]


  4.   4. Posted By: Dudley
        Date: February 9th, 2011 @ 10:20 am 

    So how does one go about buying a piece of Williams? I’ve got my eye on the “a”.

    [Reply]


  5.   5. Posted By: Harvey Yates
        Date: February 9th, 2011 @ 10:26 am 

    It will be a sad day if Patrick Head does retire, even partially. One of the greats, and probably the lest ‘sung’ of all. Together with Frank Williams he has run one of the most successful post war F1 teams. It was, so often, the one to beat.

    The years when it was just them and McLaren were tremendously exciting. Some of the best.

    I know the the old order must change but it still doesn’t make it any easier.

    Ron Dennis steps down, now, it seems, so does Patrick.

    ‘It’s Formula One, captain, but not as we know it.’

    The very best to him in whatever he chooses to do.

    A knighthood might not go amiss.

    [Reply]

    ian Reply:

    Hear Hear.

    [Reply]

    thomas Reply:

    ‘lest sung’ for good reason. A dinosour now in the wrong era.

    Perhaps when he has ‘stepped away’ Williams can return to being, at least, a top middle tier team.

    [Reply]

    Harvey Yates Reply:

    Thomas,

    Thanks for the reply. (I’m irritated that you’ve quoted my spelling mistake though.)

    I’d be interested to know why you think, as you seem to be saying, that Head is the cause of Williams’ poor performance of late.

    I know who I would ‘blame’.

    Derek

    [Reply]

    Rubinho's Keyfob Reply:

    Hi Harvey,

    “I know who I would ‘blame’.”

    Go on then, spill the beans ;)

    Harvey Yates Reply:

    Rubinho,

    Nothing clever or even contentious I’m afraid. All I meant was Newey’s leaving hurt the team considerably, hence blame being quoted. Let’s see, what team is he with now? I bet they are successful.

    I had a bet with friends, as you do, with regards which team would be most successful last season. I won’t say which way I went but I reckoned for one team their two drivers would cancel each other out. One of my mates said: Don’t you realise, you’re betting against Newey. That’s daft.

    I had my doubts then, although not as strongly as I did at the end of the season.

    We give the drivers all the accolades but Newey doesn’t get anywhere near the praise that he deserves, nor the money.

    ian Reply:

    ‘thomas’
    you sure must be a clever guy, how many race wins?championships?

    [Reply]


  6.   6. Posted By: Coxy
        Date: February 9th, 2011 @ 10:38 am 

    Does anyone know how I can buy some shares. Obviously im not normally into this type of thing buy shares and so on Its just I ( like alot of fans) would treasure the oppertunity to own a small part of a team, it may be a once in a lifetime oppertunity.

    [Reply]

    Baktru Reply:

    Talk to your bank, that is probably the easiest.

    [Reply]

    Ross Reply:

    Speak to a stock broker – there are tons and open an account -I use Barratt & Cooke. Im trying to buy but at the moment i cant…

    [Reply]

    Jason Reply:

    Can you do it online on one of those internets sites? I know nothing of stocks and live in America is that a problem?

    [Reply]

    James Allen Reply:

    You can buy shares through a high street bank. Certainly in the UK you can

    [Reply]

    Jason Reply:

    Thank you, I’m looking into it! I’m not even a Williams fan but I think everyone should support them as Formula 1 fans!


  7.   7. Posted By: ian
        Date: February 9th, 2011 @ 10:59 am 

    I hope it works for them, and Patrick Head deserves a happy semi retirement. He and Sir Frank have made a massive contribution to the sport.

    [Reply]


  8.   8. Posted By: Silverstone79
        Date: February 9th, 2011 @ 11:20 am 

    I think I might be able to squeeze afew shares into my portfolio !

    Seriously I hope the minimum subscription is low enough to allow me to buy some purely for sentlimental reasons…as you can tell from my user name in the very first race I attended, Williams did quite well!

    [Reply]


  9.   9. Posted By: Andy C
        Date: February 9th, 2011 @ 11:27 am 

    James,

    where do I obtain the prospectus?

    Thanks
    Andy

    [Reply]


  10.   10. Posted By: Richard hawley
        Date: February 9th, 2011 @ 12:24 pm 

    Should you buy shares or flush your money down the toilet? Might be a short term gain if the 2011 car flies first couple of races but there after its down hill all the way.

    [Reply]


  11.   11. Posted By: Jeroen
        Date: February 9th, 2011 @ 12:28 pm 

    I really like willams as a team and I can understand the excitement and willingness of a lot of fans to buy shares, but..

    For one I doubt many fans will get the opportunity to buy shares as I suspect most will go to institutional investors. I doubt it is coincidence that the Austrian business man (his name escapes me) who bought 10% last year is not heavily involved in this given the Germanic flavour to this ipo.

    You also have to ask yourself, what if ferarri or mclaren float. Would you not be better off having shares in those. I guess what I am saying is that what is the point in investing in a not so succesfull team where none of this investment is actually going towards improving it’s form.

    Good luck though to all that will be buying shares!

    [Reply]


  12.   12. Posted By: jonrob
        Date: February 9th, 2011 @ 2:25 pm 

    The prospectus is here if you want to look:
    http://www.attwilliams.com/system/uploads/attachments/0008/5701/Prospectus_FSA_final_Total_Internet.pdf

    There is no mention (that I can find to date) of any special arrangements being made for fans to purchase via a tame broker at a reduced fee.

    This float does not raise any money for the company, but merely gives the proceeds to the current shareholders. (in euros)

    Patrick Head currently holds 2,350,000 shares so is likely to rake in €56.4M less charges and cgt (if applicable) assuming the shares sell at €24 each, but of course they will go at the offer price of slightly less, while you buy at the bid price of a bit more.

    An interesting way of presenting the fundamentals is used in the prospectus enabling only 2007 and 2008 full years to be compared directly and in 2010 apparently the “Other” current assets jumping upwards by £25.8M, could this be the inclusion of the WHP business to boost the value? (or did they buy some more pencils?) for no apparent extra expenditure, indeed less than the previous year.

    It will be very interesting to see how the shares fare on the 3rd March when they are exposed on the market.
    The International Securities Number (ISIN) is DE000A1H6VM4.

    The Frankfurt Stock Exchange ticker symbol will be WGF1.

    [Reply]


  13.   13. Posted By: Ikertzeke
        Date: February 9th, 2011 @ 2:26 pm 

    How can you buy if you don´t have access to all the information available? What happens when the actual concorde agreement ends? We don´t know. Too much questions unanswered.
    Also, valuing the company 250 million pounds is too much, too optimistic or both…

    [Reply]


  14.   14. Posted By: speed
        Date: February 9th, 2011 @ 2:41 pm 

    Just throwing some rough numbers together which could be totally wrong, so please do not rely upon this analysis:

    Valuation looks a bit toppy. EBITDA has been all over the place. I am going to use a normalized EBITDA of £13m and EV/EBITDA multiple of 13x (which I think is generous). I am seeing other publicly listed sports clubs trading in the 10x – 16x range. This gives me a total enterprise value of: EBITDA * 13 + Cash = £194.
    So a valuation in the range of £250 seems on the higher side. For a small company with a risky business model I think a rational investor should demand a better return (or lower share price). But there might be many irrational investors who just want to own a piece of williams at whatever cost.
    On the plus side, if they can improve their position in the constructors and increase their share of the prize fund, it will be a big plus for the investors.
    Either way, it will be interesting to see how this trades.

    [Reply]

    JR Reply:

    I thought the same thing, and then I glanced through the prospectus and found that 2010 is the first year that Williams Hybrid Power was consolidated on the books. The potential future profits from WHP are probably taken into account in the valuation–though even that is somewhat iffy.

    [Reply]

    speed Reply:

    WHP’s numbers looks tiny. I doubt it would have a noticeable impact (for now anyway).

    [Reply]


  15.   15. Posted By: Brian Morrison
        Date: February 9th, 2011 @ 3:09 pm 

    Some very interesting comments on the flotation and the listing in Frankfurt on the Entry Standard of the Frankfurt stock market.

    This removes a considerable number of the transparency requirements, especially those relating to providing details of sponsorship income and allowing more lax accounting methods.

    So, anyone who does invest is taking a much bigger risk than they would if the listing were on a more regulated area of the stock market.

    There’s also an interesting question about how much money the team will get because 22% of the total shares in the team (owned by Patrick Head) are being transferred to investors, that means the money will go to Head and not directly to the team. Seeing as he has now stated to Reuters that he will be retiring in a year or two he would have to be very generous to pass any of his income from his shareholding on to the team, and the value of the flotation should be significantly affected by his departure due to his long association with Williams and his track record in designing winning cars.

    So, not all what it seems really.

    [Reply]


  16.   16. Posted By: Anooj
        Date: February 9th, 2011 @ 7:58 pm 

    Interesting tidbit from the prospectus regardubg PDVSA sponsorship and Pastor Maldano. For all that Frank said about hiring Pastor not only for the sponsorship, the document states that Williams would lose the money if Pastor doesn’t race:

    “Risks Arising From Sponsorship Agreements Being Dependent On Certain Drivers
    The current sponsorship of the Team by PDVSA is linked with the Team’s appointment of Pastor
    Maldonado as one of its race drivers. In the event that Mr Maldonado’s contract is terminated or Mr
    Maldonado is otherwise excluded by the Team from participating as its race driver at Grands Prix and
    no replacement driver is agreed with PDVSA, the current sponsorship agreement with the Team may
    be terminated by PDVSA.
    The termination of PDVSA’s or any future sponsorship agreement with Williams could, in the absence
    of the replacement for such sponsor, have a material adverse effect on Williams, its sources of income,
    its profits, its balance sheet and its financial position, and as a result, on those of the Issuer.”

    [Reply]


  17.   17. Posted By: Alex
        Date: February 9th, 2011 @ 8:07 pm 

    What are the chances that if VW or Qatari money comes up in the near future that Frank could buy the shares back?

    [Reply]

    jonrob Reply:

    Frank’s best bet will be to buy them back himself when the price has fallen. OR the company can buy them back it is is cash rich at any point. In fact it may well have to do so to prop the price up. Since as far as I can see the float price is at a huge P/E ratio and there are over 30 risks listed in the prospectus. The NAV accounts for about €5 of the share price even though it suddenly leapt up in 2010 with no apparent extra costs. I would guess (wildly) that the true value is about €17 per share on a conservative P/E of 3 which is more reasonable in this extremely risky game.

    [Reply]


  18.   18. Posted By: KenC
        Date: February 9th, 2011 @ 9:49 pm 

    These types of investments are almost universally bad. If you have a sentimental interest, then one share might be worth having.

    Patrick is essentially cashing out, at a price set by the underwriters. This doesn’t mean the team is actually worth 250M pounds. It only means that is what the underwriters have determined. Having said that, if the underwriters overestimate the initial offering, they are usually on the hook for the balance of the shares if they don’t sell, so they tend to underestimate so that the shares are oversubscribed. Of course, they don’t want to underestimate too far, as that leaves money on the table, and future companies that want to go public, may not choose underwriters who badly underestimate.

    Since only a fraction of shares are being sold, Williams has no risk of being manipulated.

    The Maldonaldo sponsorship risk, is what a prospectus is required to list. It’s called boilerplate, and all prospecti have it, so as to limit liability. They list anything that might possibly happen, so that you can’t sue them later for not telling you.

    If Frank were smart, he’d cash out with Patrick, because you can only go to the till once before the investors realize they’ve been had.

    Usually a cash-out isn’t allowed for a year or two or more, as the funds raised are usually earmarked for some purpose of reinvesting in the actual business.

    As I said, this is NOT a good investment.

    [Reply]


  19.   19. Posted By: Alex
        Date: February 10th, 2011 @ 2:04 pm 

    Just a thought – can we expect to see a few low fuel glory runs from the Williams over the course of the winter tests?

    [Reply]


  20.   20. Posted By: Jorge
        Date: February 10th, 2011 @ 3:21 pm 

    As I remember it, in early 90′s Bernie had plans to float F1. This never happened because – according to some sources: see FORMULA 1, THE BUSINESS OF WINNING by Russell Hotten – the need of disclosing financial information that all open-trade companies are required to do didn’t go along too well with Bernie’s business stategies and traditions.
    If Williams float a part of their business, perhaps one may do some backwards calculations and find out what really is written in the Concorde Agreement money clauses.

    [Reply]


  21.   21. Posted By: MattNZ
        Date: February 11th, 2011 @ 11:21 am 

    Just a shocking investment. i feel sorry for the fans who will inevitably lose money on this investment, and are being suckered in by a misguided sense of williams nostalgia.

    [Reply]

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