Markets force Formula One to put brakes on IPO | Business| Economy and finance news from a German perspective | DW | 01.06.2012
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Markets force Formula One to put brakes on IPO

Present turmoil in financial markets has reportedly caused motor sport racing company Formula One to delay plans for going public next week. Seeing Facebook's IPO as a warning, F1 wants to wait until 'the time is right'.

Formula One dropped plans to hand over its IPO prospectus to authorities in Singapore, a source close to the deal told Reuters news agency Friday.

In addition, another undisclosed source familiar with the matter told the AFP news agency that F1 would wait "to see how markets are doing" as it was looking for "the most opportune time" for the launch.

In what's believed to be one of the biggest initial public offerings this year, Formula One reportedly planned to issue stocks worth $3 billion (2.42 billion euros) at the stock exchange in Singapore next week.

According to F1, supremo and part-owner Bernie Ecclestone, there was no "big rush" for the IPO, but that the racing company would plan to launch it "for sure" by the end of the year, suggesting a delay until after the current season.

"We haven't got a date set yet, but with all the problems in the eurozone and the markets, we will be waiting until things have settled a little," Eccelstone told British newspaper "The Guardian."

The delay came just one day after London luxury jeweler Graff Diamonds ditched its $1 billion IPO due to "adverse market conditions," as well as against the backdrop of slumping Facebook shares which have lost more than 23 percent within their first ten trading sessions.

Behind the scenes

Formula One is seeking to sell part of its holding company – owning sport's commercial and broadcast rights – for which IPO pre-marketing to gauge the interest of investors has already started.

Reuters news agency quoted is source as saying that the IPO would be launched once investors "felt comfortable" with market conditions.

"They are still talking to investors, but they are taking a more cautious stance," the source told Reuters.

In addition, Formula One's teams and the commercial rights holders are still fine-tuning an extension to the so-called "Concorde Agreement," a deal that sets out issues primarily concerning financing and prize money allocation.

Bernie Ecclestone has said the "majority" of teams have signed a deal, though Mercedes are thought to be one of the teams still weighing their options, along with veteran privateer outfit Williams.

Close observers of the sport have noted that confirming the current 12-team lineup for the next several years - the existing deal runs to 2020 - would boost F1's perceived value among investors.

uhe/gb (AFP, Reuters, dap)