F1 Owner Courts Gulf Funds For $2bn IMG Bid
The biggest investor in Formula One (F1) motor racing is teaming up with one of the biggest shareholders in the McLaren sports car group to form a $2bn offer for IMG, the sports rights agency.
Sky News has learnt that CVC Capital, which owns roughly one-third of F1's parent company, has joined forces with Mumtalakat of Bahrain to bid for IMG.
Initial bids for IMG, which counts the men's world tennis number one, Novak Djokovic, among its biggest clients, are due within days.
Under CVC's plans, it would form a consortium in which it would hold a 60% stake in IMG, while Mumtalakat and the Abu Dhabi Investment Authority (ADIA) - both of which are sovereign-backed groups - would own interests of about 20% each, according to a person close to the auction.
The Middle East-based entities are investors in the circuits which stage the two countries' respective Grands Prix, which have become annual fixtures on the F1 calendar.
CVC's consortium is expected to be in a powerful position in the auction of IMG, which has been owned by Forstmann Little, a US buyout firm, since 2004.
Its decision to sell is sparking interest from potential bidders around the world, including a joint offer from KKR and New Mountain Capital, which was established by a former IMG executive.
Set up in 1960 by the late Mark McCormack, who wanted a vehicle to represent the golfing legend Arnold Palmer, IMG has gone on to become one of the biggest names in global sport.
Earlier this year, it signed a deal to act as stadium consultant to the organisers of the 2022 FIFA World Cup in Qatar. It also counts Wembley and the Maracana in Rio de Janeiro among its other stadium clients.
The agency has also diversified in recent years into the worlds of fashion and entertainment, now employing 3500 people around the world and striking joint ventures with big media companies in key emerging markets such as Brazil, China and India.
In 2010, IMG made $78m (£51.3m), while this year it is expected to make more than double that amount, with its emerging markets exposure providing a platform for future growth.
The entry of hundreds of millions of people into the world's middle classes in Africa, Asia and Latin America over the next two decades will further expand demand for access to live sport, agencies such as IMG believe.
CVC would be a logical buyer of IMG. Since gaining control of F1's shares in 2005, it has grown the sport's profits significantly, to the extent that it has been planning a stock market listing in Singapore that could value F1 at $12bn (£7.9bn).
It also previously owned Dorna Sports, the organisation behind the Moto GP racing series, and bought All Sport Management, the company which has the rights to advertise at F1 circuits around the world.
The private equity group this year abandoned a bid for Betfair, the betting exchange, but owns other leisure assets in the UK, including a big stake in Virgin Active, the health and fitness chain.
CVC faces tough competition to secure control of IMG, which is arguably the most coveted sports rights asset to come up for sale for several years.
Among others considering bids are Colony Capital, which had a £1.3bn offer rejected earlier this year.
Rival talent managers such as Creative Artists Agency are also expected to bid, as may IMG partners including Reliance Industries in India.
CVC declined to comment.