CVC sells 21% of F1 for 1.6 billion dollars
As a listing on the Singapore Stock Exchange seems increasingly likely, CVC Capital has decided to sell 21% of F1 to another consortium of investment funds for the sum of 1.6 billion euros. This values the discipline at over nine billion dollars.
The sale was made to the consortium of Waddell & Reed Financial, Norges Bank Investment Management, and especially BlackRock, one of the largest investment funds in the world. This further increases the financiers’ grip on the capital of a discipline that reinforces its status as a cash machine.
Donald Mackenzie, one of the partners of the selling investment fund, comments on this session: « This is great news for Formula 1 and an important step for its development. CVC became the majority shareholder of Formula 1 in 2006. Since then, we have supported the company and its management as they have successfully advanced the business. The addition of these three major investors is a validation of this success and we look forward to working with our new partners in the years to come. »
Nevertheless, this sale before a potential IPO raises a number of questions. Indeed, why would investors as renowned as those mentioned take the risk of investing such a sum in a company whose economic future is still far from assured? Thus, today’s announcement reduces the room for maneuver for CVC and, consequently, for Bernie Ecclestone in their negotiations with the teams for the new Concorde Agreements.
However, Mercedes has clearly made it known that the proposed terms were not acceptable to them. The German manufacturer will be able to increase the pressure in the discussions since, now, if it does not manage to obtain satisfactory terms, it could leave the discipline. If this were to happen, the value of F1 would be greatly impacted since the star-branded firm supplies engines to three teams, including its own. This is also true for the other major teams, Ferrari, McLaren, or Red Bull.
This would have a significant impact on CVC since the fund still holds 40% of F1, maintaining its role as a principal shareholder. It seems that its leaders have estimated that the current agreement allows them to confirm the stated valuation of ten billion dollars. However, the risk may seem somewhat high in the current situation…
With the participation of RacingBusiness.fr
