Private equity firm CVC Capital is targeting a $12bn (£7.8bn) market capitalisation for Formula One in its planned flotation on the Singapore stock exchange, according to a source close to the company.
The initial public offering (IPO) of F1 is on track to take place in the next 12 months despite its chief executive Bernie Ecclestone being engulfed in a legal battle over payment of an alleged bribe.
CVC originally intended to float F1 in June last year but put the brakes on the plan due to the worsening eurozone crisis. Instead, it cut its stake by around half through selling 28.4% of F1 for $2.1bn to money managers BlackRock, Waddell & Reed and Norges, the investment division of Norway's central bank.
The source said that CVC "isn't planning to sell more stakes before the float. If you look at Discovery Channel and other comparables, the market is up 25% since we tried to IPO last year so just mathematically applying the new pricing for the company, it is worth 25% more. I certainly think you could shoot for $12bn."
As there are no other major quoted sports rights management companies, F1 compares itself to media companies such as Nasdaq-listed business Discovery Communications. It runs the Discovery Channel and over the past year its shares have risen over 50%.
"Sport businesses and content businesses are in significant demand and F1 is one of the very best," said the source adding that "I don't see why the IPO would not be on track for the next 12 months."
However, the road ahead is not clear. F1 boss Ecclestone is embroiled in multiple law suits relating to a $44m payment made by him and his family trust to German banker Gerhard Gribkowsky shortly after CVC bought F1 in 2006.
Gribkowsky was chief risk officer of German bank BayernLB which sold its 47.2% stake in F1 to CVC. German prosecutors believe that Ecclestone paid the money to Gribkowsky to steer the sale of F1 to CVC as it had agreed to retain him as the sport's boss. Ecclestone denies this and says that Gribkowsky threatened to make false allegations about his tax affairs to the Inland Revenue if the money was not paid.
In June last year a Munich court found Gribkowsky guilty of receiving a bribe and sentenced him to eight-and-a-half years in prison. Media outlets in Germany recently claimed that Ecclestone has been charged with bribery but he says that the prosecutors haven't contacted him.
"I haven't heard anything from them," Ecclestone told the Guardian. "I don't know what they are doing. At the moment I am a suspect with five other people. If they charge me presumably they will have to charge the other people. I hope they don't but I think they will. Then we will see what happens. That doesn't mean to say there will be a trial."
The F1 boss added: "CVC are standing by me 100%."
Under German criminal law, if someone is charged, a court has to decide whether to bring the case to a trial or proceedings could be dropped in exchange for a 'non-penal payment.'
Ecclestone's German law firm Thomas Deckers Wehnert Elsner said: "The documents with the charges from the Munich prosecutor's office have not yet been received by the defence. Therefore, we cannot provide a statement. The defence sticks to its view that Mr. Ecclestone has neither committed bribery nor played any part in committing a fiduciary breach of trust."
Ecclestone is also facing a civil suit in London's high court from German media company Constantin Medien, which claims that it lost out on a profit-share agreement from the sale because F1 was in fact worth more than CVC paid.
"I think we need to clarify Bernie's situation in Germany and I think once that is clear the market would love an IPO," said the source. He insisted that CVC has no plans to replace Ecclestone. However, this will have to be considered at some stage in future since he turns 83 this year.
F1 only has 313 staff and 10 senior management. There is no deputy or chief operating officer waiting to take over the driving seat. Ecclestone is responsible for all divisions of the company and all geographic areas rather than having separate bosses running them.
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image: © Nick Webb