CVC to cut Formula One stake to 30% after Singapore IPO

Reuters reported the news on Thursday, shortly after CVC sold a $1.6 billion stake in the company to BlackRock, Waddell & Reed and Norges Bank Investment Management earlier this week. The price at which the 21% stake was sold set a benchmark valuation for Formula One at around $7.6 billion. The private equity firm saw its 63.4% stake cut to 42.4% through the deal.

Formula One is expected to seek a valuation of around 18-22x EBITDA for the IPO, in which it will offer stapled securities made up of equity and units of a shareholder's loan. The securities - an unusual structure for an IPO in Asia - are expected to pay a yield of 4-4.5%. The floatation could be completed as early as June.

Formula One Group is responsible for the promotion of the FIA Formula One World Championship and the exploitation of the sport's commercial rights.

CVC acquired a majority stake in the company through a series of loans totaling $2.5 billion in the mid-2000s. The administrators of collapsed US bank Lehman Brothers own 15.3%, while Slavica Ecclestone, ex-wife of company CEO Bernie Ecclestone, holds 8.5% through Bambino Holdings. Ecclestone himself owns a 5.3% stake.

In March, Ecclestone told Reuters that Singapore was the best place to float the motor racing business, in a move to tap enthusiasm for international sporting brands in Asia. A Formula One race has been held in Singapore each year since 2008.

Goldman Sachs has been hired to advise the listing and CVC is expected to employ a number of other investment banks.

The IPO is set to be Singapore's fourth largest ever and the biggest since Hutchison Port Holding Trust raised $5.8 billion in March last year. Formula One has an annual turnover of EUR1.17 billion ($1.52 billion).

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