Milkstone blog entry
September 20th 2011
Readers of both the sports pages and the business pages cannot have failed to notice that the Glazer family, controversial American owners of one of our local football teams Manchester United, are planning a partial flotation of the club. However, “partial” is the operative word. According to the Financial Times, the Glazers plan to sell about a third of the club’s equity (for which they hope to raise $1bn), valuing the entire club at $3bn.
Listing in Singapore is attractive for two main reasons; one, the club’s advisers expect to be able to get a better valuation for the club in the Far East than they might by listing in London or the US and two, the regulatory regime is probably less onerous in Singapore than in, say, Hong Kong.
Disappointingly for potential investors, two classes of shares are proposed. About a third of the new equity, or 12% of the total, will be in the form of Ordinary shares with full voting rights. However, the balance is likely to be “non-voting perpetual preference stock” with no dividend guarantees or rights to sell the shares back to the club. These shares would rank ahead of the Ordinary shares in the event of insolvency. Fans of the club familiar with the “cup scheme” will not be surprised to discover that the two types of shares come as a package, i.e. investors will not be able to buy just the Ordinary voting shares. Whilst not in line with best practice in corporate governance, such a two tier equity structure is an established form of capital raising.
For a much better, in depth financial analysis of Manchester United and other football clubs, we recommend that clients look at the “andersred” blog - http://andersred.blogspot.com
The IPO process is not proving straightforward, as the Straits Times of Singapore reported on September 17th;
“The club received the go ahead to list on the Singapore Exchange (SGX) on Friday - as tipped by The Straits Times - but its intended debut in mid-October has been put off and no new date has been given. Bankers fear the market turmoil caused by the European debt crisis will deter investors.”
Last weekend’s British press also suggested (again) that a new bid for the Club may emerge from the Middle East.
Full details of the initial public offering have yet to emerge and we will update clients when we know more. We are able to deal in shares listed in Singapore and, if the IPO does go ahead, we plan to produce investment research on the company.
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