Bernie Ecclestone has raised the possibility of the commercial arm of F1 being floated on the stock market in Asia.
The 81 year old billionaire has told the Telegraph that he thinks a floation in Asia, either in Singapore or possibly Hong Kong would be a good step for the business and allow private equity form CVC to make a complete or partial exit.
“If I wanted to dispose of the company today I would float it in Singapore or Hong Kong,” Ecclestone said, adding that if CVC wants an exit, “it would be better to float the company in Singapore than sell it”.
But that does not mean its going to happen or is even likely to happen. It’s just standard practice when looking to create a market for a sale. There are a few parties interested in acquiring the company which holds the rights to F1, from NewsCorp, which still has an open dossier on it through to Middle East sovereign wealth funds. Even some teams have suggested that them owning a stake in the sport would be desirable and would bind them in.
Today’s message will put interested parties on alert and focus minds.
A colleague who works with private equity firms on this kind of transaction told JA on F1, “It’s a usual way of doing things – you run an auction with buyers at the same time as preparing for an IPO. It keeps competitive tension between both the private buyers and the public markets.”
Ecclestone has looked at flotations before but it didn’t work out due to EU competition issues.
CVC owns the majority of F1’s commercial rights holder and any exit is likely to give them a massive profit on their initial investment of $1.7 billion in 2005. They have maintained publicly that they do not want to sell.
That acquisition is the subject of a trial currently running in Munich, looking into the part played in it by Gerhard Gribkowsky, who was in charge of selling the business on behalf of the state run bank Bayern LB which he worked for and which had acquired the rights when the previous owners, Kirsch media empire went bust.
Ecclestone testified that the $44 million paid by himself and the family Bambino trust was not a bribe but a payment to ensure that Gribkowsky did not bring false allegations to the UK tax authorities that Ecclestone was in charge of the running of Bambino, which would prompt a long and expensive investigation.
In London the Serious Fraud Office has indicated in the last week that it is in contact with the German authorities and may want to look into the matter.
“The SFO is aware of the allegations against Mr Ecclestone and is liaising with the authorities in Germany to ascertain if there is a case in the UK to answer,” a spokesman for the SFO told the Financial Times.
If the SFO were to launch an investigation it would be interesting to see if it had any effect on a flotation. As vendor, CVC would be required in any case to offer indemnities, which might be more straight forward in a private sale than a public one.
There also remains the issue of the 2013 Concorde Agreement. It is hard to see how any sale, either public or private, could take place until a new one is agreed and put in place, binding in the governing body, commercial rights holder and teams for a fixed period of five years or more.
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