UPDATE 2-Canadian pension fund bets big on world of motor sports

Fri Oct 26, 2012 2:38pm EDT

* CPPIB buys 39 pct stake in Dorna from Bridgepoint

* Fund also finances large part of loan to Formula One Group

Oct 26 (Reuters) - Canada Pension Plan Investment Board, one of the country's top pension fund managers, on Friday outlined two major investments in the world of professional motor racing.

CPPIB, known for staid investments in infrastructure projects, shopping centres, private equity firms and the like, said it had stuck a deal to buy a big stake in motorcycle grand prix organiser Dorna and was also financing a large chunk of a loan to Formula One Group.

The pension fund manager said it had signed an agreement to acquire a 39 percent stake in Dorna - organiser of MotoGP events and the FIM World Superbikes Championship - from private equity firm Bridgepoint.

CPPIB did not disclose the purchase price, but a source familiar with the deal said it was about 400 million euros ($518 million).

The stake sale is another example of how large pension funds are buying into businesses alongside private equity houses as they look for better returns from growing companies with good long-term prospects.

The $100 billion Texas Teachers' pension fund last week agreed to buy a 3 percent stake in the Formula One motor racing business, investing alongside private equity house CVC.

Madrid-based Dorna organises 18 races in 13 countries and generates revenues from television broadcast contracts, sponsorship and advertising as well as corporate hospitality and related services.

Bridgepoint bought Dorna in 2006 in a deal that valued the company at about 500 million euros. Dorna recently bought the FIM World Superbikes Championship for an undisclosed sum.

The sale of a stake to CPPIB means Dorna has earned Bridgepoint and its investors more than three times the sum they put into the company, the source said.

Dorna holds the global rights until 2036 to organize the FIM Road Racing World Championship Grand Prix, known as MotoGP. It recently bought the FIM World Superbikes (SBK) Championship, bringing the two leading racing events under one roof.

The firm has grown under Bridgepoint's ownership, adding new races to its calendar. It has also benefited from growing global interest in racing and television networks' demand for top tier sports.

The CPPIB buy is expected to close in the final quarter of 2012.

HIGH-YIELD LOAN

The pension fund manager, which boasts over C$165 billion ($165.41 billion) in assets, separately announced that it had closed a debt agreement with Formula One Group to finance $400 million of a $1 billion private high-yield loan.

Formula One Group is a global sports management organization that holds the race promotion, broadcasting, advertising and sponsorship rights for the FIA Formula One World Championship.

The group is majority-owned by a company controlled by private equity firm CVC Capital Partners.

The terms of the loan were not disclosed, but CPPIB said the investment offers "attractive risk-adjusted returns."

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Comments (1)
HeywoodFloyd wrote:
I love Motor sports but this seems like a totally inappropriate investment for a Pension fund.

Oct 26, 2012 3:03pm EDT  --  Report as abuse
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