CVC sells $500-mn stake in Formula 1 to Waddell & Reed
18 Jun 2012
British private equity firm CVC Capital Partners has agreed to sell a 5.5-per cent stake in Formula One Group (Formula 1) to US asset manager Waddell & Reed Financial Inc for approximately $500 million.
Further to the deal, Waddell & Reed will increase its holding in Formula 1 to 20.9 per cent from the present level of 15.4 per cent, while CVC's stake will get reduced to just over one-third.
London-based CVC is one of the world's leading private equity and investment advisory firms. The company acquired majority control in Formula 1, one of the world's greatest sporting and media franchises, in 2006.
"CVC Capital Partners is pleased to announce that several funds managed by Waddell & Reed Investment Management Company and Ivy Investment Management Company have today agreed to invest a further $500m in a private placement in Formula 1 at $9.1bn enterprise value, increasing their aggregate stake to 20.9%,'' CVC said in a statement.
After the deal, CVC will continue to be the Formula 1's largest and controlling shareholder. British billionaire and 'F1 president and chief executive officer Bernie Ecclestone holds 5-per cent stake in the company.
The stake sale has come just few days after Formula 1 shelved its plans for a $2.5-billion Singapore initial public offering (IPO), one of the largest in Singapore, due to volatile global economic condition.
About a fortnight ago, Ecclestone had said that the Singapore IPO may not proceed as planned in the wake of ongoing market jitters, and it will go ahead when ''the time was right.''
It is not known how much of its stake in Formula 1 CVC plans to offload through the floatation.
It was earlier reported that Formula 1 had cancelled $1.8 billion in loans as it was conditional upon the proposed IPO pricing.
Earlier in May, CVC sold a 21-per cent stake in Formula 1 to three leading investment groups including Waddell & Reed, BlackRock Inc and Norwegian Central Bank's investment arm Norges Bank Investment Management. (See: CVC sells $1.6-bn stake in Formula 1 ahead of IPO)
Formula 1 conducts 20 races in cities across the globe yearly. The sporting extravaganza has over 500 million TV viewers and the revenues this year are expected to exceed €2 billion this year for the first time.
Several Asian companies have postponed their proposed IPOs on concerns over the potential fallout of the eurozone debt crisis highlighted by the Spanish banking problems and the Greek turmoil. These include London-based jeweller Graff Diamonds, China Non-ferrous Mining, China Yongda Automobile Services, etc.
Some analysts believe that investors' appetite in Formula 1 has not subsided despite the uncertainties in the stock market, as indicated by the latest deal.
Kansas-based Waddell & Reed provides investment management and distribution services through its subsidiaries to clients in the US. It has approximately $94 billion in total assets under management as at the end of March 2012.