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Force India confirms new part-owner: Team Valued at $235 million
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Posted By: James Allen  |  12 Oct 2011   |  6:31 pm GMT  |  67 comments

Force India boss Vijay Mallya today confirmed that he has sold 42.5% of the F1 team to Sahara India Pariwar, described as “a leading promoter and patron of sports in India.” The fee is US$100 million

The deal therefore values the team at $235 million (£150 million), a significant uplift on the price Mallya paid to buy the team known as Spyker. It is the same Silverstone based team which was originally known as Jordan, founded by BBC pundit Eddie Jordan.

“With this investment both the Sahara India Pariwar and Dr. Mallya will own 42.5% each in the team. The Mol family’s equity will be at 15%,” said a team statement. The Mol family is the original Dutch investor which was part of the team when it was Spyker and which has retained an equity stake ever since.

The investment is an important indicator of the impact F1 is likely to have in India. It comes just a fortnight ahead of the inaugural Indian Grand Prix at Buddh International Circuit, near Delhi. Reports on Reuters suggest that ticket sales have been strong and a capacity 150,000 crowd is expected for the October 30 event.

Sahara is a big mover in sports in India, the company is the shirt sponsor of the Indian cricket team and owns a team in the IPL cricket series, as does Mallya.


The team will henceforth be known as Sahara Force India F1 team. Subrata Roy Sahara, the Chairman of Sahara India Pariwar said, “India is reaching new heights in all spheres, including sports. Formula One car racing has always remained a bastion of the western world. The advent of India in this exciting sport has remained a matter of pride for all our countrymen. I feel doubly proud that Sahara is the co-owner of India’s only F1 team and I am sure that through the Sahara Force India F1 Team, we will together bring pride and laurels to our beloved nation.”

At the same time, Team Lotus boss Tony Fernandes has cast some doubt on whether his Indian test driver Karun Chandhok will get a race opportunity at the Indian Grand Prix, as has long been speculated. Chandhok sat in for Jarno Trulli at the German Grand Prix in July, but speaking to F1.com today, Fernandes said “I’d like to see him in the car, but practically there’s no point in putting him in just for the sake of it. We have two extremely experienced race drivers and I’ve got to do what’s right for them and for the team, not for Karun or for the Indian fans.

“My heart would love to see him race there. Emotionally it makes sense, but we have to come tenth.

“But ultimately it’s not my decision. I’ve told the team it’s up to them. None of us wants to put him under even more pressure than he’s already going to be under at his home race, and the truth is we have to focus on securing tenth place. When we ran him in Germany he did what we asked him to do. He did the best job he could in a car he had hardly run in, and despite what people think, it is impossible to just jump into the cockpit and be as quick as your team mate.”

Team Lotus is currently in tenth place out of 12 teams in the Constructors’ Championship, an important position as it carries financial benefits in terms of prize money, freight and personnel travel dispensations.

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67 Comments
  1. AndyC_F1 says:

    Seems like a wierd one to me to be honest. I’d heard rumours of money troubles, so this stacks up.

    They;re a good professional team and have a great engine/tech support setup.

    I have forgone any opportunity to make a cheap joke about Sahara and solid foundations on sand. :-)

    1. wayne says:

      41% of Indian people live in Poverty and the child labour rate is the 12th highest in the world. Get a grip India and get your priorities right!

      1. sachindgr8 says:

        this is not government backed sport in india. It completely privately organized one, so, i dont see a point in your comment.

      2. wayne says:

        It very simple, my point is, regardless of whether it is private finance or govenment money, there are bigger fish to fry in these countries than holding a ‘look at how amazing we are’ GP. There isn’t even any sort of car racing culture in India for goodness sake. Private companies have a social responsibility just as public companies and organisations do.

  2. Ashish Sharma says:

    I must confess, even given the atmosphere generated by the Indian Grand Prix, this seems to be a high valuation. The Williams IPO at Euro 265m M-Cap was believed to be overpriced and the stock has duly taken a hammering of 40% over the first six months.
    I remember the purchase price for Mallaya being about $109M, so this is a significant improvement over the years, as the Spyker sale had almost been as is from the Midland price…
    It was surprising to see this valuation in the current economic climate, more so in a nation where cricket is the start and end of all sporting events, and with England in India for a cricketing tour, it will be interesting to see the numbers for the race…

    1. CTP says:

      i was hoping someone would list the purchase price. he’s basically made back his initial investment then. it’s all gravy from here on…

      1. James Allen says:

        90 million Euros is a number I recall, but not definite

  3. Force Indian says:

    Hey James,Sorry If I sound confused but you stated that total valuation is about $235 millions.Isn’t that much larger than current champion red bull?so will force India trouble big boys with their increased budget in 2012?

    1. James Allen says:

      No, that’s not the annual budget, that’s the total value of the team.

  4. Peter Scandlyn says:

    Don’t care for the man but good call – waste of a drive otherwise.

  5. Jason C says:

    A question: will this team face any problems with the re-naming like the two Lotuses have? If not, why not?

    1. James Allen says:

      Same as Lotus Renault GP. The chassis is still a Force India so no problem with name change

  6. Sebee says:

    If this means that HRT and Virgin are together worth around $400M total, there is a serious need for someone to get a new calculator.

    1. I’d imagine Force India to be worth much more than HRT/Virgin…

  7. ColinZeal says:

    Wow $100 million for 42.5%.
    How much do you think it cost to totally mess up their logo and make it basically unreadable?

    1. vancouver j says:

      I can totally picture some poor designer shaking his head and sighing…

      Good old SAHARA orce India formula one team.

      1. ColinZeal says:

        It was probably done about 10 minutes before the press announcement, cos even Dr Vijay didn’t know the team was for sale the day before, apparently…

  8. mo kahn says:

    Its a fantastic alliance. Dr. Mallya’s UB Group and Sahara Group are the India’s top ten cash rich groups (trust me you cannot imagine the money corporate India has). The money flow into Force India will be tremendous.

    I would love to see Tata Motors (The group that owns Jaguar and Rover) come into F1 for they are the second richest conglomerate in India.

    I hope this alliance would encourage them to have a serious look into F1 where they are already there as one of the sponsors of Ferrari.

    And trust me… if Tata Group come in they can have the a budget as big as the Ferrari at their disposal for they are unbelievably cash rich.

    1. Sebee says:

      We all know about the misadventures of Jaguar in F1, and they would hardly have a shot with top 4 constructor spots pretty much locked up for seasons to come.

      Who’s engine would Jaguar F1 car run with? Ceratinly not Mercedes – one of its top competitors. Pure? And putt around with the medical car for the next few seasons?

      And Rover F1 team? Wrong sport. Rover Dakar Team – OK.

      As wonderful as it would be to see a manufacturer come into the sport, they would be throwing money away right now. The only way it makes sense is with an engine – and if you read Renaults overtures, as well as Mercedes, Ferrari and Pure – seems there is a shortage of teams to sell engines to. I think it wil be a long long time before we see someone come into the sport. I’m not even sure the engine formula change will yield a new manufacturer in the sport beside Pure, unless someone pays Pure to rebadge the engine. There are two brand I miss in F1 – Honda and BMW. But unless the engine rules are opened a bit, what benefit does a manufacturer have to come into F1?

      1. AndyFov says:

        I’m not so sure the constructors’ spot is that predictable. Things change. There was a time when you’d never imagine Red Bull achieving what Williams used to.

        Red Bull have managed to prove what BMW and Toyota didn’t, and that’s success can be achieved without 40 plus years of heritage.

        I’d not underestimate India’s ambition or ability to conquer F1. It’s by no means a certainty, but stranger things have happened.

      2. Sebee says:

        Actually, Red Bull have not achieved what Williams used to just yet. But in my mind, I never doubted Red Bull’s commitment to F1. In no time they owned two teams and were putting the pieces into place. We’ve seen this story play out with Benetton, and they just took that successful script and said – do that again, only better.

        FI may have the ambition, but they don’t have the “sauce”. Considering the population and money in India, I’m not saying a “conspiracy theory” of FI winning to draw the money and the audience to F1 is not likely to play out. It’s just a big ask to climb over McLaren, Ferrari, Red Bull, Mercedes. Those four would have to almost agree to throw a few seasons in effort to draw more eyeballs in India to F1 for ultimate reward of exposing their brands to this new audience. I would compare that to topping Apple’s iPad for example. Someone may do it, but it’s going to have to be some stubborn company with piles of money to burn on what is realistically hardly likely to deliver a profit.

      3. mo kahn says:

        Tata Group is a diverse conglomerate. Tata Motors already produce range of cars, they produce buses, trucks, heavy industrial machinery, owns Jaguar and Rover (its only a part of it). Tata Motors have extremely close links with Mercedes probably more so than any team currently using their F1 engines, for they have been in collaboration for over twenty years for producing Mercedes road cars in India until recently where now Mercedes is now producing independently, having said that, one must realise that it was Tata Motors who created Mercedes as the Leading Luxury car Manufacturer in India through their local know-how, infrastructure facilitation, distributor network and after sales services. Beyond that they have TCS which stands for Tata Consultancy Services which supply software to the Ferrari F1 team and I think also to their road cars even.
        The Financial Wing of Tata comprises of Telco, Tisco, and many more and each of their company is more valuable than Dr. Mallya and Sahara Group Combined. Each company and not consolidated, mind you, so they have money to spend. They have mechanical know-how in terms of automotive engineering. So all combined it would be a wonderful thing for F1 and for them to be a part of F1 fraternity.

        Yes Toyota’s recent fiasco are fresh in everyone’s minds and it was thought that Toyota’s main problem was not funds but the chain of command which lagged the progress considerably.

        It does take extreme dedication and constant evolution to succeed in F1 and of course the right personnel. Tata’s corporate culture is in the same frame, they won’t succeed initially, but there is no one from India that has the ability to constantly inject the required funds for a ten year and beyond plan than Tata.

        I hope they do consider.

      4. Sebee says:

        No doubt. But is it a company that’s willing to burn $100M a year on an F1 effort? We’ve seen often that even the richest quickly loose appetite for this “investment”.

      5. Sebee says:

        You know what I always wondered? With all this European money chasing F1 and endless hundres of millions of Euros invested in cars, wind tunnels, etc. How is it that the US corporate machine and all the multinationals in United States of America want very little to do with F1? If you could take a 100M team and bump it 250% value in a few years – why wouldn’t the cue be full to the brim with American companies and VCs, drivers, etc. wanting a piece? They don’t like to make money? Doubling their investment is bad?

        Never mind that US is not a key F1 market, obviously these teams are making money and Americans also know a bit about the subject.

        Something doesn’t compute here. It really has that feel of a European club only after the whole US F1 Team drama. Which would explain why India had to get it’s membership by Force perhaps.

        But back to the point – with this type of return potential, where are the US Sharks? Where is the US money? Seems highly strange that no US company manages to succeed in F1, be highly profitable even hosting a race, or running an F1 team. Best you see is a wing or barge board here or there with an HP, Intel of FedEx logo. Strange. Very strange.

    2. herowassenna says:

      I’m sorry Mo, but as Toyota proved, and Ferrari themselves during the 80′s and 90′s, having the biggest budget doesn’t mean anything without the right personnel.

  9. gudien says:

    Good to see India will be represented in F-1 for the foreseeable future. Credit Vijay Mallya for having the vision to get the job done for himself, and his countrymen.

  10. James Walton says:

    This news is a matter of huge indifference. ‘Once an also ran, always an also ran’. This development will only induce frustration with F1 in India, maybe until they realise that throwing money and egos at F1 doesn’t get cars and drivers to the leaderboard. I predict long term dissatisfaction dressed up as success.

    1. quest says:

      So Red Bull would also still be classified as “also ran” is your opinion. Because they were once where Force India are now.

      Force India have made steady progress after starting right at the back and so are Team Lotus.

      1. James Allen says:

        Very good point. I had this discussion the other week. Someone asked me why to the midfielders bother? Red Bull was P7 in 2008 championship.

  11. David B says:

    Off subject but the picture on the front page is superb. James, your website is the best of any coverage on F1…please keep it going.

    Ps Any involvement from India can only be a good thing

    1. Phil says:

      Yes, Vettel wins the WDC and we see a picture of Button. How very… British. How very suprising.

      1. Robie says:

        I’m not British but I would rather see Jenson and his girl holding up the finger than Vettel any time!

        Great pic James.

      2. K says:

        +1 on Robbie!

  12. [MISTER] says:

    Hi James.
    Thanks for taking the time and share this with us. It looks to me like a good deal.

    The only question I have is if from now on..will Force India have the same aproach to your talented drivers or will this change and do you see Sahara wanting an Indian driver in the future?

    Thanks

    1. [MISTER] says:

      meant to say “young talented drivers” not “your talented drivers”.

    2. James Allen says:

      I’m sure they really want to develop an Indian driver. But it only ever works if he does well. We saw that with Sato and Honda and it’s been the issue with Americans in F1

      1. Sebee says:

        With all those older F1 cars, I can’t believe Ferrari doesn’t invest in developing an American driver. They could give him plenty of F1 seat time to get him there. I can hardly believe there isn’t a perfect individual in US, and Ferrari could easily lock him up, and shoot for it’s #1 market. Would be huge. Perhaps Red Bull will give it another shot. Someone should.

  13. Adrian Newey Jnr says:

    James – to what do you credit FI’s performance this year? Engineers, engine package, etc?

    1. James Allen says:

      Better aero and very good operations guys like Dom Harlow and Andy Stevenson. Strategy, pit stops etc have been pretty sound.

      1. JamesF1 says:

        Makes you wonder whether the troupe of aero staff and engineers that left Force India for Lotus really made that much difference. Maybe if next year’s Lotus (or Caterham?) is in front of the Force Indias, that will be the answer to that question.

  14. Manish says:

    It’s a Wonderful news for Indian F1 fans and it’s presence in F1. As an Indian I can vouch that Sahara is a huge company and for sure will bring lot of value to FI. Now that the Ice has been broken by Sahara, I can foresee many Indian companies making investment in F1. Reliance Group, Tata are the prime prospects.

    On the lighter side,If Reliance group owner, Mukesh Ambani can sell a portion of his $1Billion house he can perhaps buy 2-3 small teams.

  15. Srinivas Katta says:

    If my understanding is of valuations is correct, the team is valued at about $ 135m. Roy has put in 100m into the company to buy 42.5%. This means the pre-existing value of the company + the money is 235m. Without the money the company is worth 135m. So this is not as a big a valuation as it is made out to be. Wonder how much Mallya has put into the company after buying it. That will show us whether he has made money on the team or has lost money.

    Srini

    1. James Allen says:

      If 100m buys you 42.5% then you’d need 235 million to buy it all….

      1. Blackacre says:

        More I think for the marriage value that total control will give over the compromises necessary for 42%.

      2. AK says:

        James, that’s not quite right. They have invested $100m into the team- ie put it in the team’s bank account, not into Dr Mallya’s.

        That $100m cash could be split between the team’s owners (like a dividend payment), which would give Sahara back $42.5m. They would still own 42.5% of the team as it was yesterday, so therefore they bought 42.5% of the team for $57.5m.

        They do this on Dragons’ Den too and it’s wrong there.

      3. MISTER says:

        Hi AK.
        Why do you say that the $100m have been put into the team? What would Mallya win from this?
        Those 42.5% were owned by someone before this deal.
        To me, it seems that Mallya has sold some of his shares to Sahara for $100m.

        If you go after your logic, the 3rd shareholder, MOL family, has won alot of money without doing anything. Because now the business that they own 15% is much more valued because of those $100m put into the business like you said.

        It just doesnt look right to me.

  16. It’s a fantastic news to Indian fans as well as to F1 World. More money will be poured in to Midfield challenger Sahara Force India F1 team.
    May be Vijay Mallya might be thinking of challenging for a Spot in top 4. Since Lotus Renault team performance is not up to the mark in the second half and it looks like next year or this year end they might be surpassed by Force India.

    Lets hope Force India moves ahead in the grid and challenges the top team, if that happens then lot the Indian Corporates can pour in money to Indian as well as non-indian teams.

  17. Arya says:

    I believe Sahara’s bid for Liverpool has reached a point of hopelessness. Hence, Subrata Roy has diverted some money to F1 now. I am sure he repents the chance of building a sports city like the Jaypee Green Sport City. If both are serious and team operations remain intact; this could be a good news. Together, they should be able to take the team to next level and compete with the likes of LRGP.

  18. surya kumar says:

    I think it is a good move by Vijay to Infuse some funds into the team so that they can take it to the next level. However Partnership in India is always short lived where egos and Tempers fare better than common business sense. I would love to see Vijay calling the shots instead of a working committee from the both the companies taking top spots and spoiling the momentum built up over the years.

  19. F1Fan4Life says:

    Hi James,

    This is off topic, but I was wondering if you had any information or what your opinion was on a couple of the recent Vettel incidents. Is it true that Vettel went to see the stewards in Monza to complain about Alonso’s move on him to the grass? Vettel claimed he did not but Martin Brundle claimed otherwise. Vettel also said he did not see Button beside him in Japan. Just asking to try and figure out what is true and what is not.

    1. James Allen says:

      It’s just part of the mix of F1, nothing unusual about any of the above. There’s no trend, if that’s what you mean

  20. robert says:

    Hi James,

    I read an article on another F1 blog where the author was very angry with the Mallya for lying about the fact of the sale in the past week.

    Obviously he did tell an untruth but in your opinion do you think it is acceptable to do so when organising such an important deal?

    Thank you as always

    1. James Allen says:

      Well as I see it Mallya has not sold his team. He has sold part of his team. As the owner of two companies with shareholders I know the difference.

      Mallya said, “I was shocked to read a media report that I am selling the Force India Formula One team. This is completely untrue and without any basis whatsoever….. As Team Principal, I will continue to run the team and I have no plans whatsoever to exit.”

      So we will see whether the sale of 42.5% is the prelude to an exit by Mallya or the introduction of a powerful new shareholder to expand the team as, for example, McLaren got when first Mansour Ojjeh and later the Bahrainis bought significant equity in the team.

      1. robert says:

        Hi James,

        That is a perfectly reasonably argument.

        Thanks

        Robert

  21. Rusty says:

    Could you ever see a situation with a joint partnership within a team whereby the cars were run independantly? So for example Sutils car was run and developed under Sahara’s management and Di Resta’s being run by Mallya. Components and chassis would be the same but, sponsorship, strategy etc being managed seperately. Or is that completely impractical?

  22. terryshep says:

    I am just amazed that no-one has mentioned the flat-out denial of any sale from Mallya only a few days ago. If I remember rightly, he said he was ‘shocked’ to read that he was selling the team, there was no foundation in the report whatever.

    With such bare-faced ability to look the Press in the eye and lie through his teeth, the man should be in government.

    One can hardly be expected to take serious notice of anything he says in future.

    1. James Allen says:

      He said he wasn’t selling the team. He didn’t say he would not sell a stake. Question is whether 42.5% is all he’s selling or whether he will sell whole thing in a few years.

      1. quest says:

        Actually he has not sold any of his shares. Its just that they have taken in a new investor and issued fresh shares to him. So the stake of the existing stakeholders has got diluted to that extent. If Mallya or the Mol family had sold their stake or part of it, the money would have gone to team and not the team.

        It seems a good development for the team whereas a sale would have the exact opposite implication. What is your opinion, James?

      2. terryshep says:

        He has handed over his sole control of the team and it depends how MOL vote their shares in any possible future dispute which would decide if he had any control at all. That seems to me to be a substantial dilution of his position and one wonders how long it will be before Sahara make Mol an offer they can’t refuse.

    2. Darko says:

      He didn’t sell the team, he sold a part of the team. Devil is always in details :)

  23. Nilesh says:

    Mallya may not have a lot of fans in the F1 world but he sure knows something about F1 team management. It may not bode well for the team if Mallya exits in the future and hands the operation to Sahara. What do your sources say James? Is there a possibility that Mallya is looking to exit?

    1. James Allen says:

      I’m working on that aspect of the story. On the face of it an odd time to choose to exit unless there is a compelling reason in the wider business sense.

      One thing to keep an eye on – Mallya talks on Indian TV clips about using the investment to boost the facilities and wind tunnel time of the team so they can challenge the top teams.

  24. quest says:

    Guys, why so much confusion. I repeat again.

    This is akin to an “equity infusion” where an investor puts in money into a company for which he is issued shares and all the money goes into the company and as such is beneficial to the company.

    This is very different to when an existing stakeholder sells his stake( or part of it ) in which case he pockets all the money from the sale.

  25. Tim says:

    James,

    Would love a story about the finances behind a formula 1 team. Do they make money, are they big losers? How much do the drivers cost, do they bring money? How much does Bernie pay them? Its all suggestions and guesses but you are in the best position on the inside to give us an idea…

    Luv your work

    Tim

    1. James Allen says:

      Good idea. I’ll add that to the “to do” list. Thanks

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