* Waddell & Reed, BlackRock and Norges Bank buy 21 pct stake
* CVC Capital cuts investment from 63 percent
* Formula One set to price offering before end of June
By Saeed Azhar and Keith Weir
SINGAPORE/LONDON, May 22 Three investment groups
have bought a 21 percent stake in Formula One from private
equity firm CVC Capital for $1.6 billion ahead of the
motor racing company's planned flotation in Singapore.
The deal sets a benchmark valuation of at least $7.6 billion
for the company as financial advisers begin to target
cornerstone and retail investors during the pre-marketing
process of the IPO. The shares are expected to debut in June.
The three investors are U.S. groups Waddell & Reed
and BlackRock, along with Norway's Norges Bank
Investment Management, the asset management unit of the
Norwegian central bank, CVC said in a statement on Tuesday,
confirming earlier reports.
Waddell & Reed said it had invested $1.1 billion through its
Asset Strategy mutual funds and separate accounts. Norges Bank
is believed to have contributed around $300 million and
BlackRock the remaining $200 million in deals struck since the
start of the year.
CVC has had a 63.4 percent stake in Formula One since 2006
and has indicated it planned to cut that stake in the motor
racing business, a glamour sport that attracts global television
audiences of 500 million for its fortnightly races.
Formula One, which owns the commercial rights to the sport
for the next 98 years, earns money from fees paid by circuits to
host races, TV income, sponsorship and corporate hospitality.
Its revenues are estimated to reach $2 billion for the first
time in 2012, according to industry monitor Formula Money
Formula One won clearance on Monday for a flotation in
Singapore which is expected to be completed next month.
"This is great news for Formula One and an important step in
its development," said Donald Mackenzie, a CVC managing partner.
"We look forward to working with our new partners over the
coming years." he added. CVC said it would continue to be
Formula One's largest and controlling shareholder.
Goldman Sachs, UBS and Morgan Stanley
are lead-managing the IPO, which could be Singapore's
biggest flotation Hong Kong billionaire Li Ka-Shing's Hutchison
Port Holdings Trust raised $5.5 billion in early 2011.
"It raises some capital, which may be required, and it gives
the IPO a little bit more credibility if some well-known
investment houses come on board pre-IPO," said Peter Elston,
head of Asia-Pacific strategy and asset allocation at Aberdeen
Asset Management's Asian unit.
Another Southeast Asia listing, Malaysia's Felda Global
Ventures Holding, plans a $3 billion IPO this year. Facebook Inc
raised $16 billion last week in a record Internet IPO.
The IPO is the long awaited public flotation of a franchise
led by octogenarian billionaire Bernie Ecclestone, a shrewd
negotiator who has expanded the sport from its European roots to
faster growing markets.
Formula One is seen tapping into Asian appetite for luxury
brands. The IPO is set to be priced before the end of June after
the company and its bankers meet with investors and fund
managers to gauge demand for the offering.
A flotation would also release the value of a 15 percent
stake held by Lehman Bros when the U.S. investment bank went
bust in 2008.
Formula One would join British luxury jeweller Graff
Diamonds in braving equity markets despite a slump in global
stocks. Graff started taking orders on Monday from institutional
investors for its up to $1 billion Hong Kong IPO.
IPOs had their worst start in about four years in the
Asia-Pacific region with overall equity market activity down
about a fifth from 2011 as investors fretted at buying new
shares because of falling markets.
A source close to the Formula One deal said on May 12 the
IPO could be delayed because of the ongoing market jitters.
EXECUTIVES LINED UP
Unilever finance director Jean-Marc Huet has been lined up
for a non-executive position on the board once the business is
floated. Nestle chairman Peter Brabeck will chair the listed
company, while Ecclestone will remain its chief executive.
Formula One could have its B+ long-term debt ratings lifted
one notch after the IPO because of an expected improvement in
its debt profile, Standard & Poor's said in a May 15 report when
it put the company on "positive" watch.
The decision "mainly reflects our view that after the IPO in
the next two to three years, Formula One's adjusted leverage is
likely to lessen significantly and durably and that private
equity sponsors will exit Formula One's capital in the medium
term," S&P said in the report.
Formula One earlier this month unveiled a $1.8 billion
refinancing package to help lay the groundwork for the IPO.