Formula One IPO

Four more banks mandated for Formula One IPO

Morgan Stanley joins Goldman Sachs and UBS as joint global coordinators for Formula One's Singapore IPO, while CIMB, DBS and Santander are given bookrunner roles.
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Celebrations at last year's Singapore grand prix
<div style="text-align: left;"> Celebrations at last year's Singapore grand prix </div>

Morgan Stanley will join previously mandated Goldman Sachs and UBS as a global coordinator for the upcoming Singapore initial public offering of Formula One, which is now on track for a mid-June launch, sources said yesterday.

The company, which owns the commercial rights to the sport and is 63.4%-owned by private equity investor CVC Capital Partners, has also mandated CIMB, DBS and Banco Santander as joint bookrunners, the sources said.

Aside from Santander, which didn’t attend the bake-off earlier this month, the line-up is not that surprising. Goldman Sachs, Morgan Stanley and UBS were bookrunners on Samsonite’s IPO in Hong Kong last year, which was also sponsored by CVC, and CIMB and DBS are obvious choices if you want to reach the local investor community in Malaysia and Singapore.

Both countries organise Formula One races and are home to big fan bases that the company may hope to turn into investors as well.

CIMB has also just agreed to buy Royal Bank of Scotland’s equity capital markets operations in Asia. RBS is a shareholder in Samsonite alongside CVC and also worked on the luggage maker’s IPO.

It also seems that a strong relationship with the Formula One sport played a part in which banks were given a role. UBS, which together with Goldman Sachs has been advising CVC on a potential listing since late last year, is a global partner of Formula One and a sponsor of the Shanghai Grand Prix, while Santander sponsors several races on the 20-race circuit and is also a team sponsor for both Ferrari and McLaren.

According to Dealogic, the Spanish bank has never acted as a bookrunner for an IPO in Asia before, but some sources have noted that Formula One wanted a bank that could bring in potential demand from Latin America — a region where Formula One racing is very popular and were Santander is particularly strong.

Bank of America Merrill Lynch and Deutsche Bank, which were invited to attend the bake-off alongside Morgan Stanley, CIMB and DBS, will not have a role on the upcoming IPO, sources said.

Formula One kicked off the IPO process with a syndicate analyst meeting in London yesterday that was attended by CEO Bernie Ecclestone.

Various media reports have put the valuation of the company at about $10 billion and depending on how much is put up for sale, the deal size could range from $2 billion to $3 billion, one source said yesterday. About two-thirds of the shares on offer are likely to be secondary shares, while the company may sell a smaller number of shares to raise some additional capital.

CVC, which bought control of Formula One in 2006, is expected to reduce its stake to just over 30% as it seeks to return some money to its investors. Meanwhile, Lehman Brothers’ administrators, which own about 15%, are also expected to sell through the IPO.

As a sport, Formula One is hugely popular in Asia and observers believe this is also where the future growth of the business will come from. Hence the decision to list in Singapore. The Formula One race circuit has made an annual stop in Singapore since 2008 and the Lion State was the first city to hold a night-time Grand Prix. However, Singapore’s race contract will end after this year’s race (in September) and will need to be renegotiated.

The other countries in Asia and the Middle East that will host Formula One races this year are Malaysia, China, Bahrain, Japan, Korea, India and Abu Dhabi.

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