CVC attempts to acquire IMG

Forstmann Little, the investment fund owner of the IMG agency since 2004, decided to put it up for sale following the death of its founder Teddy Forstmann in November 2011. The capital gain is expected to be very significant since it paid 750 million dollars nine years ago, while current negotiations are reportedly ranging between 2 and 2.5 billion dollars.

One of the bidders since the beginning of the month is CVC, known by F1 fans as the main shareholder of the sport. It is surrounding itself with significant financial partners to set up its offer. Originally, the sovereign wealth funds of Bahrain, Mumtalakat, and Abu Dhabi, Abu Dhabi Investment Authority, were associated with the project, but the presence of the latter now seems more uncertain. According to information from Sky News, it appears that CVC has added to its pool of partners, the company The Chernin Group led by Peter Chernin, a former director of News Corp, which is supported by Qatari and American funds.

The presence of CVC and Mumtalakat on the list of potential buyers for IMG is interesting on several levels. Indeed, Mumtalakat has been one of the main shareholders of McLaren for many years. Its involvement in F1 is therefore very significant. For CVC, the rationale behind such a purchase would be to have a vehicle in which to place its stake in F1.

Indeed, CVC has been looking for many months to sell its stake. The preferred route so far has been the introduction of the sport to the Singapore Stock Exchange. However, this process has been stalled for some time now, mainly due to market conditions. But more importantly, the fund’s executives are troubled by the legal proceedings in Germany against Bernie Ecclestone. The downside of having a publicly listed company is also having to publish detailed figures every quarter, which is not necessarily the specialty of negotiations in this field.

Acquiring IMG could allow F1 to be placed under the umbrella of this sports business specialist, who has been chosen as a consultant in stadium management for the 2022 World Cup in Qatar as well as for Wembley and Maracana. This would undoubtedly increase the asset’s value, and a bundled sale in a few years would likely result in a new capital gain for the investment fund. The advantage for the sport would be to be owned by sports specialists rather than financiers more motivated by returns on investments than by the interest of sport itself.

Nevertheless, the competition to acquire IMG is expected to be fierce since other industry specialists are in the running. These include Creative Artists Agency and Silver Lake, both specialists in managing Hollywood actors, as well as investment funds like KKR. In total, ten candidates have successfully passed the first bidding hurdle. The battle is just beginning.

With the participation of www.Racingbusiness.fr