UK private equity firm CVC sells Formula 1 stake for $500m

British private equity firm CVC Capital Partners Ltd said it had disposed of further stock in motor sport racing company Formula 1 to several funds managed by US investor Waddell & Reed Investment Management Company and its unit Ivy Investment Management Company for USD500m (EUR393.5m).

With this deal, the buyers had raised their combined stake in Formula 1 to 20.9%, CVC said.

The transaction gives the target company an enterprise value of USD9.1bn, according to the vendor.

Waddell & Reed’s previous buy of Formula 1 shares took place in late May, when the company, together with Norway’s central bank Norges Bank and US investment manager BlackRock Inc (NYSE:BLK), invested USD1.6bn to buy a combined 21% interest, CVC has said.

CVC has been Formula 1’s largest and controlling shareholder since 2006 when it bought some 63% in the motor racing firm for USD2.6bn.

The private equity owner has reduced its holding in Formula 1 to about 35% over the recent months, while Bernie Ecclestone, the firm’s commercial chief, still holds 5% in the business.

At the beginning of June, Formula 1 decided to postpone a planned up to USD3bn initial public offering (IPO) in Singapore due to volatility of the market. Ecclestone said at the time that the company would wait for the right time to list its shares.

The decision by CVC to sell Formula 1 shares reduces the pressure on the private equity firm to try to list the motor racing company, Reuters said.

Race promotion fees make about one third of Formula 1’s revenues, while another third comes from broadcasting rights and the rest from advertising and non-core operations including transportation of race teams and hospitality at race tracks.