F1 puts the brakes on IPO

Motor sport racing company Formula One has delayed its Singapore initial public offer worth up to $3 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 IPO as global markets tumbled on concerns over the euro zone crisis and a slowing Chinese economy.

‘Biding time’

Ecclestone, commercial head of the sport and also a minority owner of Formula One, signalled the delay in an interview with Reuters 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.”

The MSCI’s index for Asia ex-Japan has fallen about 11 per cent in the past month, taking a heavy toll on the region’s IPO pipeline. Investors were already wary of new offers following the botched Facebook IPO. The stock price of the biggest social media web site has fallen 22 per cent in 10 trading sessions since its debut in the United States.

Globally, the amount raised from stock market flotations is down 46 per cent this year from the same 2011 period. Excluding Facebook, 72 US-listed firms have filed, raising $13.1 billon, which is down 53 per cent, according to Thomson Reuters data.

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.

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.”

Options open

Formula One management has been stressing that it is keeping its options open on its future financial structure. Chairman Peter Brabeck told Reuters 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 deal last month to sell a 21 per cent stake in the business to US investments groups Waddell & Reed and BlackRock, along with Norway’s Norges Bank Investment Management.

The sale cut CVC’s stake to around 42 per cent and CVC Managing Partner Donald Mackenzie said last week that 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 like Bahrain and Abu Dhabi paying up to $40 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.

Goldman Sachs, Morgan Stanley and UBS have been hired to lead the IPO.