Motorsport racing company Formula One has delayed its Singapore initial public offer worth up to $3 billion (R25.5 billion) due to weak markets, with the sport's boss and part-owner, Bernie Ecclestone, saying the firm is waiting until the time is right.
Formula One has dropped plans to lodge its IPO prospectus with Singapore authorities next week, a source familiar with the matter confirmed on Friday, becoming the fifth major IPO to be pulled or delayed in Asia over the past week alone.
On Thursday, London luxury jeweller Graff Diamonds scrapped its planned $1 billion (R8.5 billion) IPO as global markets tumbled on concerns over the euro zone crisis and a slowing Chinese economy.
Ecclestone, commercial head of the sport and also a minority owner of Formula One, signalled the delay in an interview on Thursday, saying the owners were biding their time.
He stressed, however, that the IPO had not been pulled.
“We're going through all the normal motions,” the 81-year-old billionaire said. “We are getting prepared so all these things are done and then whenever we want to go, we can go.”
Investors were already wary of new offers following the botched Facebook IPO. The stock price of the biggest social media website has fallen 22 percent in 10 trading sessions since its debut in the United States.
A second source familiar with the Formula One IPO said pre-marketing for the offer would continue.
“They are still talking to investors, but they are taking a more cautious stance,” this source said, adding the IPO could be launched once investors felt comfortable with market conditions.
STUCK ON THE GRID
Ecclestone said it would be wrong to talk of any delay because no firm date had been set for an IPO: “It's going to be this year, we said we would do it this year.”
Formula One management has been stressing that it is keeping its options open on its future financial structure. Chairman Peter Brabeck said last week no decision had been made whether to proceed with the IPO.
Private equity firm CVC Capital Partners, the major shareholder in Formula One, unveiled a $1.6 billion (R13.6 billion) deal last month to sell a 21 percent stake in the business to US investments groups Waddell & Reed and BlackRock, along with Norway's Norges Bank Investment Management.
TAKING THE PRESSURE OFF
The sale cut CVC's stake to about 42 percent and CVC managing partner Donald Mackenzie said last week the agreement had eased the pressure to do an IPO. CVC has been the main owner of Formula One since 2006.
Formula One gets about a third of its revenue from race promotion fees, with countries such as Bahrain and Abu Dhabi paying up to $40 million (R340 million) a year for the rights to host Grands Prix.
Another third of revenue comes from broadcasting rights, with the rest from advertising and non-core businesses such as transportation of race teams and hospitality at race tracks. - Reuters