initial public offerings (IPOs) trading on American exchanges

Tuesday, August 16, 2011

Manchester United plans a $1 billion IPO in Singapore

Manchester United’s owners have appointed Credit Suisse to prepare for a $1bn partial flotation, an outcome that would go a long way towards establishing a true valuation of the Premier League champions.

Two people familiar with the plan said the flotation would take place in Singapore. Another person said the plan was for 25-30 per cent of the club to be made available.

Credit Suisse has been hired to lead the listing process, as sole global co-ordinator and bookrunner, according to people familiar with the matter. Credit Suisse declined to comment, while Manchester United said: “We don’t comment on market speculation.”

The Glazer family, the US-based owners of United, have long believed that the club was worth more than £2bn ($3.3bn), although one person with knowledge of the flotation plan said the Glazers had been advised that a partial flotation could establish a value of £1.7bn.
Manchester United's Nemanja Vidic (C) lifts the trophy with teammates after their FA Community Shield soccer match against Manchester City at Wembley Stadium in London August 7, 2011.

Winning the United IPO will be regarded as a major coup by the Singapore Exchange, which has invested significant effort in seeking to attract substantial listings from overseas as part of its “Asian Gateway” strategy.

The SGX has traditionally been regarded as a poor relation of the much bigger Hong Kong market, which benefits from a flow of mainland Chinese listings and was initially expected to win the flotation.

The SGX is also understood to have been chosen as a listing venue by Fitness First, the UK gym chain, which hopes to raise about $500m in an IPO that has been delayed by market conditions.
However, Hong Kong remains the Asian exchange of choice for many overseas companies, having won the $11bn IPO of Glencore, the Swiss-based commodities group, in May.

United have been champions of England for a record 19 times, and have strengthened their squad with a number of players in the summer transfer window, establishing the club as firm favourites to retain the Premier League title.

One source said the loss-making club had switched to Singapore from Hong Kong, which has become the venue of choice for global brands such as fashion house Prada SpA and cosmetics maker L'Occitane International, but did not give a reason.

Hong Kong bars unprofitable companies from listing on its exchange. United's 2010 full-year results showed gross debt attached to the club standing at 522 million pounds, with a net loss of 84 million pounds.

The Glazer family, which took United private following their 790 million pounds ($1.3 billion) takeover in 2005, has endured a turbulent spell at the helm of the Old Trafford side. Fans have taken to wearing the green and yellow colors of United's predecessor club Newton Heath in an anti-Glazer campaign.

The Americans have been criticized by supporters who are uncomfortable with the club's levels of debt, despite continued on-field success, most recently last season's record 19th league title.

A multi-million pounds summer signing spree of players including Ashley Young from Aston Villa may have helped assuage fan concerns, along with an opening day 2-1 league victory against West Bromwich Albion.

The IPO of a globally recognized brand such as Manchester United would be a coup for Singapore, which has been competing with Hong Kong for international listings.

Despite winning the biggest IPO in Asia Pacific during the first half of 2011 -- the $5.45 billion deal from Hutchison Port Holdings Trust in March -- Singapore's $7.1 billion in IPO proceeds in the period paled in comparison with Hong Kong's $13.4 billion, according to Thomson Reuters data.

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