By Samuel Ee
SINGAPORE - Any plans for a Singapore listing of Formula One may hinge on a new five-year contract to host the grand prix race in the republic.
According to a Bloomberg report, CVC Capital Partners, the private equity firm which is the majority owner of F1, has hired Goldman Sachs to sell part of F1 in an initial public offering with Singapore as a possible listing venue.
With Formula One likely to be valued at over US$10 billion (S$12.6 billion), the IPO would certainly do much to boost the image of the local bourse, which has so far lagged its regional counterparts when it comes to attracting big names.
The first Singapore Grand Prix took place in 2008 and this year's September instalment is set to be the final one unless a new five-year contract is signed with commercial rights holder Bernie Ecclestone. Negotiations are underway but it is understood that one sticking point is the sanction fee.
Singapore is said to be paying an annual fee of about US$40 million, or roughly twice as much as Malaysia, so it is no surprise that the government is studying whether F1 is worth the price.
The republic is not the only F1 host country chafing at the high cost. On Monday, organisers of the Korean Grand Prix reported that talks with Formula One Management have resulted in a US$20.5 million reduction for this year's fees.
Last year, the Koreans paid US$55 million for hosting and TV rights.
'The Singapore government wants Formula One to be listed here and for that to happen, it knows the race has to remain here,' said one banker. 'But at the same time, it doesn't want to pay top dollar again. So the bargaining should continue for some time.'
He said that as one of the top financial centres in Asia, Singapore is the natural choice. 'It is prestigious to list here, and all the funds are here to tap the Indian and Indonesian money.'
The banker said that Hong Kong was not relevant because 'there's no F1 race', while India is not a financial hub.
'But Bernie knows Singapore needs him because the SGX hasn't had any big names in recent years. Being the shrewd businessman that he is, he will play hardball.'
However, one stockbroker questioned the wisdom of trying to lure glamorous listings, such as Manchester United. The English football team is said to be reconsidering its IPO plan here.
'What is good for the bourse may not be good for the subscribers, especially if the high valuations fizzle out and the underwriters are left holding the baby.
'If that is case, then what is the point of a star-studded attraction if there is no audience for the show?'
This article was first published in The Business Times.