Formula One, the motor racing
championship embroiled in a bribery scandal, generated CVC
Capital Partners Ltd.’s biggest return from a single investment
in the past 12 months.
The buyout firm has marked up the value of its stake to 4.7
times its initial investment, according to a presentation at
CVC’s annual investor meeting in London last week obtained by
Bloomberg News. The leveraged buyout firm has already reaped
1.74 billion euros ($2.3 billion) from the holding after selling
a minority stake and refinancing loans.
CVC is seeking to take Formula One public in Singapore even
after German prosecutors claimed in June that the sport’s Chief
Executive Officer Bernie Ecclestone allegedly sent $44 million
to a Bayerische Landesbank executive in exchange for the 2005
sale of the German lender’s stake to CVC.
Donald MacKenzie, the CVC managing partner who led the
Formula One acquisition, told a Munich court in January that he
wasn’t informed about payments made to former Bayerische
Landesbank Chief Risk Officer Gerhard Gribkowsky. Gribkowsky
appealed in July a verdict sentencing him to more than eight
years in prison. Ecclestone, 81, remains under investigation and
hasn’t been charged with a crime.
CVC bought about 63 percent of Formula One in 2005 and 2006
from its lenders for an undisclosed amount, using about $2.5
billion of loans. In May and June this year, the private equity
firm sold a $2.1 billion stake to Waddell Reed Financial Inc.,
BlackRock Inc. and Norges Bank Investment Management in deals
valuing the auto-racing company at $9.1 billion.
Fundraising Plans
CVC, which manages a 10.8 billion euro-buyout fund, is
stepping up the pace of asset sales as it prepares to start
raising a new fund in the fourth quarter or the first quarter of
next year, according to the document. The firm has returned 5.1
billion euros to its backers in the past 12 months, 71 percent
more than in the year-earlier period, the papers show.
Buyout firms such as CVC typically use loans secured on the
targets they acquire to finance half to two thirds of the
purchase price, and cash from their own funds for the rest. The
firms seek to improve performance at the companies they acquire,
or expand them, before selling them within about five years.
A spokesman for CVC in London declined to comment.
CVC reaped 1.39 billion euros, or 2.7 times its initial
investment, from the sale of central European brewer StarBev LP
to Molson Coors Brewing Co. in April, the document shows. It
received 1.15 billion euros, or 4.3 times its initial outlay,
from the disposal of metering company Elster Group SE in June.
Ahlsell
CVC spent 1.7 billion euros on new investments in the past
12 months, including a 550 million-euro holding in Ahlsell AB, a
Swedish construction products supplier.
CVC sold a 10 percent stake in itself to three sovereign
wealth funds, people with knowledge of the transaction said
yesterday.
The funds are the Kuwait Investment Authority, the
Government of Singapore Investment Corp. and the Hong Kong
Monetary Authority, according to a person with knowledge of the
talks. The firm has the “clear intention” to remain private,
according to the presentation. GIC declined to comment by e-
mail, while officials at the HKMA weren’t immediate available to
comment outside office hours.
To contact the reporter on this story:
Anne-Sylvaine Chassany in London at
achassany@bloomberg.net;
To contact the editor responsible for this story:
Edward Evans at eevans3@bloomberg.net
Enlarge image
Formula One CVC’s Most Profitable Investment Amid Bribery Case
Andrew Hone/Getty Images
Racing is underway at the Italian Formula One Grand Prix at the Autodromo Nazionale di Monza on September 9, 2012 in Monza, Italy. CVC Capital Partners Ltd. bought about 63 percent of Formula One in 2005 and 2006 from its lenders for an undisclosed amount, using about $2.5 billion of loans.
Racing is underway at the Italian Formula One Grand Prix at the Autodromo Nazionale di Monza on September 9, 2012 in Monza, Italy. CVC Capital Partners Ltd. bought about 63 percent of Formula One in 2005 and 2006 from its lenders for an undisclosed amount, using about $2.5 billion of loans. Photographer: Andrew Hone/Getty Images