A consortium of US-based investors is close to buying a big stake in the McLaren Formula One (F1) team in a deal that will value the historic British racing outfit at more than £550m.
Sky News can exclusively reveal that MSP Sports Capital, whose partners have had extensive involvement in Major League Baseball, American basketball and European football, is leading a group that will inject £185m into McLaren Racing over a two-year period.
The deal could be announced as early as Sunday, according to sources, coinciding with McLaren’s most important F1 race for years.
The team’s drivers – Lando Norris and Carlos Sainz – qualified for the Abu Dhabi Grand Prix in fourth and sixth places respectively, giving them the chance to clinch third place in the constructors’ championship for the first time since 2012.
McLaren’s deal with the MSP-led consortium will underline the investors’ belief in the team’s long-term resurgence and provide a welcome injection of capital into a broader automotive group which has been hit hard by the coronavirus crisis.
The new investment is expected to value McLaren Racing, which also competes in the INDYCAR championship in the US, at £560m after the injection of the £185m of equity.
Sources said the consortium members included The Najafi Companies, a private investment firm, and UBS O’Connor, a hedge fund subsidiary of the Swiss investment banking giant.
The consortium will initially acquire a 15% stake in McLaren Racing, rising to 33% by the end of 2022, according to one source.
As part of the transaction, one of the consortium’s principals, Jahm Najafi, will become a vice-chairman of McLaren Racing, while Jeff Moorad of MSP and Rodrigo Trelles Zabala of UBS O’Connor will join the McLaren Racing board as non-executive directors.
Mr Moorad has been involved in the leadership of a string of US sports franchises, including baseball’s Arizona Diamondbacks and San Diego Padres, while MSP is a current investor in clubs in the Spanish and Portuguese football leagues.
The deal for its F1 team does not affect the ownership of McLaren Automotive, the division of McLaren Group which makes luxury road cars and which was highly profitable prior to the COVID-19 crisis.
Founded in 1963 by Bruce McLaren, the car marque is one of the most famous names in British motorsport.
During half a century of competing in F1, it has won the constructors’ championship eight times, while its drivers have included the likes of Mika Hakkinen, Lewis Hamilton, Alain Prost and Ayrton Senna.
In total, the team has won 180 Grands Prix, three Indianopolis 500s and the Le Mans 24 Hours on its debut.
It has fallen on leaner times on the track during the last decade, although under its current racing chief executive, Zak Brown, its fortunes have begun to revive.
The sale of a minority shareholding will provide sufficient funds to assist Mr Brown’s ambition of seeing McLaren compete again for F1 drivers’ and constructors’ titles in the coming years.
Mr Brown is understood to have committed his long-term future to the team as part of the capital injection.
An annual budget cap will be introduced in F1 from next year, starting at $145m (£110m) for each team, falling in the ensuing years to $135m (£102m).
By bringing in the new investors, McLaren should be able to operate at the level of the cost cap on a sustainable basis.
It is the latest F1 team to offload a significant stake, and follows the recent takeover of Williams Grand Prix Holdings by Dorilton Capital in a deal which ended the eponymous family’s decades-long connection with the company.
McLaren’s on-track operations account for roughly 20% of the group’s annual revenues.
It has sponsorship deals with companies including Darktrace, the cybersecurity software provider, and Dell Technologies, the computing giant.
The capital-raising for its racing arm forms part of a broader attempt to refinance the company, even as its automotive arm continues its recovery from the pandemic.
McLaren Group is in talks with several bidders for its spectacular Surrey headquarters, a deal that could raise about £180m as part of a sale-and-leaseback deal.
Earlier this year, the company cut 1,200 jobs across its operations as part of a restructuring plan affecting more than a quarter of its workforce.
McLaren is owned by investors led by Mumtalakat, Bahrain’s sovereign wealth fund, which injected £300m into the company in March.
It also secured a £150m loan from the National Bank of Bahrain, and is expected to raise a further £400m of equity next year, although reports this week suggesting that it may do so through a public listing of its shares were dismissed as “completely wide of the mark”.
McLaren is a major British exporter, directly employing about 3,000 people and supporting thousands of jobs across the UK supply chain.
The blizzard of new funding arrangements comes nine months after McLaren parachuted in Paul Walsh, the heavyweight former boss of Diageo, as executive chairman.
McLaren’s road-car division, which was previously a semi-independent company called McLaren Automotive, makes some of the world’s most expensive cars, with models including the Senna – named after the legendary former F1 driver.
The unit, which is run by Mike Flewitt, represents the majority of the group’s sales.
The British company saw its separate divisions reunited following the departure in 2017 of Ron Dennis, the veteran McLaren boss who had steered its F1 team through the most successful period in its history.
He became one of Britain’s best-known businessmen, expanding McLaren’s technology ventures into a wide range of other industries through lucrative commercial partnerships.
Mr Dennis offloaded his stake in a £275m deal following a bitter dispute with fellow shareholders.
He had presented to McLaren’s board a £1.65bn takeover bid from a consortium of Chinese investors, but did not attract support for it from boardroom colleagues.
McLaren declined to comment on Saturday evening.