Source: Reuters/Chaiwat Subprasom
A Manchester United fan from Thailand looks inside a souvenir shop in Bangkok
After first eyeing a Hong Kong IPO, the former English Premier League champion had planned a US$1bn listing in Singapore in the second half of last year before putting plans on hold because of market turmoil.
The US-owned club filed with the Securities and Exchange Commission on Tuesday to raise up to US$100m in an IPO of its Class A ordinary shares in New York.
In the US, the amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO may well be different.
IFR reported last month that the club, which has been Premier League champion for a record 19 times and features players likes England star Wayne Rooney, had dropped plans for an Asian listing in favour of a US float. (Click here for the June 13 story.)
The company filing for a much lower amount than then originally expected US$1bn did not come as much of a surprise, said Josef Schuster, founder of Chicago-based financial services firm IPOX Schuster.
“The smaller the float, the higher the relative valuation can be … This may just be a strategy initially to make it appear like a low-float IPO,” Schuster said. “Traders may believe that, if the deal is very low, the company can pop at the opening.”
Global fan base
Manchester United has a global fan base of 659m, according to a survey the club commissioned and market researcher Kantar carried out last year. Almost half of United’s supporters were in the Asia-Pacific region.
“It remains to be seen how much the football club is going to benefit in the US where the sport is not very popular … The perfect place for it to have listed should have been London,” Jay Ritter, a University of Florida IPO expert told Reuters.
The club, founded in 1878 as Newton Heath LYR Football Club, plays its home games at Old Trafford in Greater Manchester. The club’s American owners, the Glazer family, are well known in the US as owners of American football team the Tampa Bay Buccaneers.
However, they have faced opposition from United fans after taking over the club in 2005 in a leveraged buyout that left it saddled with hefty debt repayments.
“It is going to come down to the valuation. US investors are not going to jump on it right away”
The club’s total debt as on March 31 stood at £423.3m (US$663.67m), according to the filing. It intends to use the net proceeds from the IPO to repay debt.
“It is going to come down to the valuation. US investors are not going to jump on it right away,” Schuster said.
The Glazer family will hold Class B shares, which will have 10 votes each representing 67% of the voting power of all shareholders, keeping the club’s management within their control.
US investors are familiar with the dual-class share structure, which has been used by household names like Google, Facebook and News Corp.
Jefferies, Credit Suisse, JP Morgan, Bank of America Merrill Lynch and Deutsche Bank Securities were underwriting the IPO, Manchester United said in a preliminary prospectus. This leaves out Morgan Stanley, which was one of the investment banks originally expected to underwrite the Singapore listing.
United did not reveal how many shares it planned to sell or the expected IPO price.
