Facebook, a Ferrari crash and sluggish markets may delay F1 Flotation

Formula One boss Bernie Ecclestone told CNN yesterday that the new Concorde Agreement has been signed by the teams and is a done deal until 2020. Now the interview seemed more like Mr. Ecclestone’s immutable style of describing the actual situation in favor of pressing an issue byt publicly saying it is completed or done but that is best left to those in the know. What he also explained to CNN is that the flotation of Formula 1 on the Singapore market may be on hold until market conditions improve. Ecclestone said:

“The market doesn’t look too bright after that little bit of a problem with Facebook,” Ecclestone told CNN. “So I think they are going to wait and see.”

Ecclestone cited the recent difficulties Facebook experienced in their IPO launch last week as the reason to be cautious but in broader terms the global economic environment looks sour. Key indicies show that economies are slowing in sync with each other instead of a few economies in isolation. Effectively that means that a global slowdown in sync means that they can be interconnected and reinforcing in relation to each other. The Greek financial crisis is certainly a prime component and the knock-on effect it may have for the European Union but even China, Brazil and the U. S. are facing slower economies and the The International Monetary Fund says the global economy is growing slower than 2011’s 3.9% rate.

In that light, waiting to launch an IPO for F1 may make sense and the proposed location of Singapore’s market to do it in is also experiencing struggles as well. Facebook’s co-founder, Eduardo Saverin, gave up his U.S. citizenship to move to Singapore to avoid taxation and this, along with a recent Ferrari crash, is creating an uproar over foreign activities in Singapore with local Singaporeans decrying the fleecing of their country by wealthy foreigners.

The key difference, and perhaps desire for a more robust market for the flotation, is that Formula One is “stapling” the shares to a long-term note or loan. This is the first of its kind for the Singapore market and would be the highest profile listing the market has had.

A similar listing was attempted a few months ago by football club Manchester United but that fell through due to market conditions and investor skittishness over the structure of a two-class share with voting rights and non-voting rights. It is assumed that F1’s structure has no effect on the voting rights of the investor.

Time will tell but with Greece and Spain weighing heavy on global economies and a synchronized global slowing of economies, F1 may do well to wait for the right time as Facebook proved.

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