March 21, 2023

DealBook: CVC Capital Is Said to Have Reduced Its Stake in Formula One

A Ferrari at the 2012 Formula One Grand Prix of Spain.Valdrin Xhemaj/European Pressphoto AgencyA Ferrari at the 2012 Formula One Grand Prix of Spain.

The private equity firm CVC Capital, which owns a controlling stake in the company Formula One, is not taking any chances before the racing company’s proposed $3 billion initial public offering.

Over the last five months, CVC has sold a 21 percent stake in Formula One to three investors for a combined $1.6 billion, according to a person with direct knowledge of the matter.

The combined deals, which value the company at over $7 billion, have reduced CVC Capital’s stake in Formula One to 42 percent, from 63 percent. The sale is part of the private equity firm’s efforts to reduce its risk ahead of Formula One’s I.P.O., the details of which began to be presented to investors on Tuesday.

The buyers include Waddell Reed, the Kansas-based money manager, which paid $1.1 billion at the start of the year for a 13.9 percent stake in Formula One. The investment management firm BlackRock bought a 2.7 percent share in April for $196 million, the person added, who spoke on the condition of anonymity because he was not authorized to speak publicly about the sale.

Norges Bank Investment Management, the Norwegian sovereign wealth fund, bought a 4.2 percent stake from CVC Capital for $300 million.

The motor racing company, which has focused on Asia as a major growth area, intends to set the final pricing of its offering in mid-June and to have its shares begin to trade in Singapore a week later, according to another person with direct knowledge of the matter.

By selling stakes in Formula One to new investors, CVC Capital also hopes to build momentum for other potential buyers for the I.P.O., according to one of the people with direct knowledge of the matter.

Unlike other companies, Formula One has few similar publicly traded sports franchises that can be used to guide investors on the price of its stock offering.

Formula One employs 200 people and last year recorded revenue of 1.17 billion euros ($1.5 billion), according to a statement on CVC’s Web site. The racing teams will meet at the Monaco Grand Prix this week, which is the most important series race of the year for sponsors and for media exposure during the race weekend.

The lead underwriters on the deal are Morgan Stanley, UBS and Goldman Sachs. The Singaporean lender D.B.S., the C.I.M.B. Group of Malaysia and Banco Santander of Spain also are involved.

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