The sovereign wealth fund of Bahrain is poised to acquire complete ownership of the prestigious McLaren Group, a leading figure in British high-end manufacturing. This move is a strategic part of the Gulf state’s long-term ambition to align with a major global industrial partner.
Sky News has reported that Mumtalakat, Bahrain’s investment fund, is nearing an agreement with McLaren’s remaining minority shareholders. This arrangement will see their shares converted into warrant-like contracts, granting them economic rights in future financial events, such as McLaren’s potential initial public offering, without the status of actual shares.
A banking expert anticipates the announcement of this deal within the week. This transaction will transform approximately 20% of McLaren’s equity into these new contracts, leaving Bahrain as the primary shareholder of the Formula One team-owning company.
While McLaren Racing, which encompasses the F1 and other racing activities, does have external investors following a capital-raising deal during the pandemic, this new agreement emphasizes Mumtalakat’s commitment to McLaren’s revival.
McLaren’s complex capital structure has previously discouraged long-term partnerships with global automotive companies. Simplifying this structure is expected to facilitate a technology partnership with an automotive OEM as McLaren shifts towards hybrid and electric vehicles.
Bankers have speculated about a McLaren IPO for some time. However, due to the company’s reliance on private funding and supply chain issues affecting its recovery, such a public listing appears to be several years away.
Earlier this year, Mumtalakat acquired stakes in McLaren held by Saudi Arabia’s sovereign wealth fund and Ares Management, a prominent US financial investor. More recently, the Bahrain-based fund invested an additional £80 million into McLaren, known for the Artura supercar.
The Artura faced delivery delays and required technical upgrades despite positive reviews. Last year, McLaren appointed former Ferrari executive Michael Leiters to lead its road-car division.
McLaren underwent a significant restructuring during the COVID-19 pandemic, resulting in job cuts and substantial equity and debt funding to stabilize its finances.
In its racing division, with drivers Lando Norris and Oscar Piastri, McLaren has seen a turnaround under Zak Brown’s leadership. The company has also engaged in several corporate transactions since the pandemic’s onset, including the sale of a stake in McLaren Racing and a £170 million sale-and-leaseback of its Surrey headquarters. In 2021, it sold McLaren Applied Technologies.
Founded in 1963 by Bruce McLaren, the group has a storied history in British motorsport. It has won eight constructors’ championships in F1 and boasts a roster of legendary drivers like Mika Hakkinen, Lewis Hamilton, Alain Prost, and Ayrton Senna. The team has won 180 Grand Prix, three Indianapolis 500s, and the Le Mans 24 Hours on its debut.
Following Ron Dennis’s departure in 2017, McLaren’s various divisions were reunited. Dennis sold his stake for £275 million after a dispute with other shareholders.
Source: Sky News
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