After a few months of speculation, the much despised owners of Manchester United look finally set for a $1 billion dollar float (approximately £600 million) of the club with an IPO of around 25-30% on the Singapore Stock Exchange (the “SGX”). It was initially expected the partial share sale of United by the Glazers would be done in Hong Kong (the “HKEX”) after the Glazers were impressed by the floats of western brands such as luggage firm Samsonite in Hong Kong which were oversubscribed but now it is understood by the BBC (
http://www.bbc.co.uk/news/business-14574131) that the club has indeed lodged a listing application to float the club in the far east not in Hong Kong but Singapore. It is believed the whole process could be completed some time around November.
United was the subject of heavy speculation in late 2010 and early 2011 of a rumoured takeover by the wealthy Qatar Holdings who were believed to be very keen on acquiring the club and thus further intensifying the United-City rivalry through a battle of Middle Eastern sheikh oil money, the takeover failed to materialise and looks unlikely to do so in the future with Qatar Holdings now holding investments in Paris Saint-Germain and Spanish side Malaga C.F. Indeed the former have already made headlines this summer completing the expensive acquisition of Javier Pastore, in addition to Jeremy Menez among others. Malaga too are flexing their muscles with purchases of the likes of Jeremy Toulalan and currently have former United hero Ruud Van Nistelrooy in their ranks.
This latest move by the Glazers is seen by a few market experts as a long term strategy for an eventual Glazer exit nevertheless the risk of a leveraged buy out once again resurfaces and as of yet it is unclear how they plan to use the proceeds of the partial sale. The obvious move would be to pay off some of the clubs debts taken on as a result of the bond issue in 2010 which replaced the original bank debts. The club is required to pay £45 million to the bondholders annually. Additionally scepticism remains on just how the Americans were to able to pay off the high interest £220 million PIK’s which were crippling the club and the source of the funds. Such secrecy will be much more difficult for the Glazers after this float where they will come under much greater scrutiny, and United fans must welcome the forthcoming transparency. Thankfully the question should be answered once the Glazers issue a prospectus similar to the one required during the bond issue process. This will outline exactly what they plan to do with the proceeds, it remains doubtful they will declare their intention to pocket the funds as this is unlikely to be an attraction to any investor. What is clear however, at this point in time is that ultimately the Glazers will retain control even with the minority sale but will also be required to pay dividends to investors.
So is this a golden chance once again for United fans to own part of United and finally force out the Glazers? It seems difficult for individuals alone if the listing is in Singapore, but a vehicle such as MUST makes it possible certainly even if I remain doubtful they will amass a large stake.
United’s financial situation can be discussed over on our forum here:
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