May 22nd, 2012
10:25 AM GMT
(CNN) – Just days after Facebook took the plunge with a multi-billion dollar shares sale in the U.S., another high-profile brand, Formula One, appears to have accelerated its own plans for a public listing in Singapore.
The Asian city-state is also one of the more unique stops on the 20-race Grand Prix calendar, as the race is staged at night under floodlights.
According to media reports, Singapore’s bourse approved plans for an initial public offering (IPO) to raise as much as $3 billion – which would be its biggest overseas floatation since Hong Kong tycoon Li Ka-Shing's Hutchison Port Holdings Trust raised $5.5 billion last year.
Private-equity firm CVC Capital Partners, which has held a majority stake in F1's holding company since 2006, has already sold a $1.6 billion stake to Waddell & Reed, BlackRock and Norges Bank in a pre-IPO deal, according to Reuters. This takes its stake down to around 40%.
"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," Peter Elston, head of Asia-Pacific strategy and asset allocation at Aberdeen Asset Management's Asian unit, told Reuters.
But Justin Harper, a market strategist for IG Markets Singapore, said he would be "very wary" of Formula One's IPO under current market conditions, which saw Facebook’s share price drop 11% on the first day of trading.
"I think it’s 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 told Agence France-Presse.
"Formula 1 might be the same and not have the support within the market for a big IPO."
With the debt crisis taking hold in Europe, many companies are looking at the cash-rich Asian markets such as Singapore and Hong Kong for investment. Last year, English Premier League football club Manchester United – which has a huge Asian fan base - had a $1 billion share float approved in Singapore.
Despite a huge turnover, the club’s net debt stands at $498.7 million, in part due to the money the U.S.-based Glazer family had to raise to buy the club for $1.2 billion in 2005.
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