Singapore approves $2.5 bn Formula One float

Updated: 22 May 2012 12:39 IST

Formula One has been given the go-ahead for a $2.5 billion share sale in Singapore, a source close to the deal told AFP Tuesday, but analysts said conditions may not be ideal after Facebook's recent disappointment.

Singapore approves $2.5 bn Formula One float
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Singapore:

Formula One has been given the go-ahead for a $2.5 billion share sale in Singapore, a source close to the deal told AFP on Tuesday, but analysts said conditions may not be ideal after Facebook's recent disappointment.

Private equity firm CVC Capital Partners, which has a majority stake in the glitzy motor sport's holding company, will gauge interest among investors and fund managers with a view to selling part of its stake at the end of June.

The source said the Singapore Exchange had approved a listing by Formula One, which has been rumoured for the past two months.

A spokesman for the bourse, citing standard policy, said: "It is not our practice to publicly comment on our dealings with listing aspirants."

Singapore hosts a popular Formula One night race, one of 20 stops on the F1 tour this year, and has a strong fanbase for the sport. This year's Singapore Grand Prix is scheduled for September 23.

An F1 IPO would likely translate into a profit for CVC Capital Partners.

It owns 63.4 percent of F1's business after it bought a majority stake in the racing company for $2.5 billion in 2006.

It would be the biggest initial public offering (IPO) this year in Singapore, which also approved a float by Manchester United in September.

However the English Premier League football club, which has a massive Asian following, is said to be awaiting better market conditions.

Some companies are looking at Asia's cash-rich markets to raise funds as Europe grapples with a debt crisis and the United States pursues a fragile recovery.

Dow Jones Newswires said order-taking international roadshows would begin in the second week of June.

But the suggested timing of the IPO is considered brave after turbulence returned to global financial markets last week amid renewed fears over the eurozone.

News of the F1 offering, which could raise as much as $3 billion, follows Friday's float of Facebook on Wall Street, which valued the web giant at $104 billion, but saw its shares plunge.

Justin Harper, a market strategist for IG Markets Singapore, told AFP he would be "very wary" of Formula One's IPO under current conditions.

"I think its similar in a way to Facebook, as in you get caught up in the hype and the glamour of Facebook and Formula 1 as well," he said.

While Facebook's debut had been much anticipated it closed a disappointing one percent higher than its opening price of $38 on Friday, before slumping 11.0 percent on Monday.

"Formula 1 might be the same and not have the support within the market for a big IPO," Harper said.

Reports of a possible F1 float broke in March and received a generally cool response among team principals in the sport, many of whom are battling financial problems.

But Caterham team boss Tony Fernandes, the man behind successful budget airline AirAsia, backed the plan, which has been spearheaded by Formula One supremo Bernie Ecclestone.

"As a businessman I think if public money can improve the sport, and accountability and transparency, then we should go for it," Fernandes told AFP in March.

"I saw some comments where the team bosses said they were against it. I think until we know more about it, it's silly to be against it. Let's hear about it in the open."

According to CVC's website, Formula One Group -- which holds the rights to commercially develop the sport, stage and promote events, sell broadcast footage and offer sponsorship and hospitality packages -- has turnover of 1.17 billion euros ($1.49 billion).

Topics : Bernie Ecclestone Formula 1 Manchester United Tennis Sachin Tendulkar
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