My colleagues at the Financial Times have written a story with comments from investors in CVC saying that they are uneasy with the the lack of response from the private equity company that owns 75% of the commercial rights of Formula 1, to the ongoing bribery allegations surrounding the sale of F1 five years ago.
They want the private equity firm to take a lead and provide more information.
“There has not been much communication from CVC on F1 and we are slightly worried about it. We do not know more about this than what we read in the media,” one investor told the FT. Investors also suggested that the group appear “paralysed” over the issue.
CVC manages capital on behalf of some 300 institutional, governmental and private investors worldwide.
CVC issued a statement in January to say that it had no knowledge of any payments to Gribkowsky, but has made no comment since the formal charging of the banker last week.
The purchase of F1 by CVC is being probed by prosecutors in Munich, who are holding Gribkowsky, once chairman of F1′s holding company and who is alleged to have taken bribes during the sale process. Prosecutors confirmed last week that Gribkowsky will be charged and that Bernie Ecclestone is under investigation.
It is alleged by prosecutors that Ecclestone received $41.4 million from Gribkowsky’s bank Bayern LB and that the Ecclestone family trust Bambino received a further $25 million.
Ecclestone in turn confirmed that he paid the $44 million to Gribkowsky, but says that Gribkowsky was threatening to make allegations to the Inland Revenue about Ecclestone’s relationship with the Bambino Trust. “He (Gribkowsky) was shaking me down and I didn’t want to take a risk, ” Ecclestone told the Telegraph last week.
He also claims that the moneys he received were approved by the bank and were a standard 5% commission for his part in the sale.
Investors are also said to be at odds with CVC over Ecclestone’s ongoing role, disputing Mackenzie’s firmly-held view that the business is worth far more with the 80 year old at the helm than not.
CVC invested $1.7 billion in F1 five years ago and has already had a good return on it. The value of its stake has undoubtedly increased, but the question is when will they try to exit?
There is speculation that CVC is shaping up for a sale in 2012. A consortium involving News Corp and the Agnelli’s investment vehicle Exor, has expressed an interest in buying CVC’s stake.
To realise maximum value from their investment CVC need the teams all signed up to a new Concorde Agreement from 2013 onwards. That negotiation has yet to start.
The F1 teams are much more co-ordinated now than at any stage in their past. They have formed their won association, FOTA chaired by Martin Whitmarsh. They are working now on establishing exactly what they want from the negotiations and it is likely that, once this is decided, their negotiating position will be unified.
That all lies in the future. For the moment, the anxious investors also acknowledge that F1 is a massive cash cow, giving great returns,
“It is one of those situations where investors are willing to put up with a lack of communication as CVC has simply shown great returns,” an investor told the FT.
CVC has a diverse portfolio of investments in companies, from paper and packaging to telecoms, postal services, chemicals, insurance and breweries.
Its website says, “Over the years, we have raised US$44 billion and invested US$28 billion. The capital of our investors is committed for ten years or more to closed-end funds that we manage on their behalf.”