F1 Rumour: McLaren In Financial Uncertainty As Bahrain Wealth Fund Looks To Sell Shares
Mumtalakat, Bahrain's sovereign wealth fund, is reportedly exploring options to sell its shares in the McLaren Group, according to a report from The Sunday Times. The sovereign wealth fund has enlisted the expertise of global financial advisors to secure a buyer, in line with directives from the Bahraini leadership.
Key Takeaways:
- The sovereign wealth fund of Bahrain, Mumtalakat, is contemplating the sale of its stake in the esteemed McLaren Group amidst ongoing financial challenges.
- A strategic partnership is being sought, with a focus on the burgeoning field of electric vehicle technology, through the facilitation of JP Morgan.
- Mumtalakat's financial involvement with McLaren, amounting to £1.5 billion over recent years, underscores its commitment to the company's stability and future growth.
McLaren Press Image
In a significant development for the automotive and racing sectors, the Bahraini sovereign wealth fund Mumtalakat is considering the sale of its significant shareholding in the McLaren Group. This move comes in response to the economic directives issued by King Hamad bin Isa Al Khalifa and reflects the financial predicaments faced by McLaren, which has relied on Mumtalakat for substantial fiscal support during the challenging times brought about by the pandemic and other financial adversities.
The financial journey of Mumtalakat with McLaren has been characterised by numerous instances of support, including a significant £300 million emergency funding initiative in 2020 aimed at addressing the financial distress caused by the pandemic. This was followed by an ambitious £1 billion capital injection in 2021, aimed at bolstering McLaren's financial standing through various means, including the sale-and-leaseback of its headquarters, the selling of a portion of its heritage car collection, and securing a joint investment with the sovereign wealth fund of Saudi Arabia.
The consolidation of Mumtalakat's hold over McLaren was further achieved through the acquisition of shares and warrants amounting to £400 million from entities like the Saudi Arabian Public Investment Fund and Ares Management. Despite these efforts, McLaren's financial losses, which more than doubled to £349 million in 2022 from the previous year, have reportedly led Mumtalakat to reconsider its involvement.
To this end, Mumtalakat has engaged JP Morgan, a leading financial institution, to identify a potential buyer after having committed a substantial £1.5 billion to McLaren over four years. The focus is on attracting a 'strategic partner' with a specialisation in electric vehicle production, mirroring McLaren's pivot towards electrification. The prospective partnership could start with a minority stake, potentially expanding in the future, which may result in Mumtalakat retaining a lesser interest in McLaren.
Discussions regarding this potential transition are reportedly in preliminary stages, with a wide range of options being considered. The search for potential partners extends beyond the traditional automotive industry, and the ultimate agreement may not necessarily involve an equity exchange.