Mumtalakat, Bahrain’s state investment fund, is buying £400m of preference shares and warrants in McLaren which were acquired by Saudi Arabia's Public Investment Fund and Ares in 2021, Sky News learns.
Thursday 22 June 2023 13:01, UK
Saudi Arabia's sovereign wealth fund is selling its stake in McLaren, the supercar maker and Formula 1 team-owner, in a deal that will reinforce Bahrain's status as the company's biggest shareholder.
Sky News has learnt that Mumtalakat, Bahrain's state investment fund, will announce on Thursday that it is buying the preference shares in McLaren Group held by Saudi's Public Investment Fund (PIF) and Ares Management.
The transaction, which is a private one between shareholders and will not lead to any new money being injected into the company, will come almost two years after PIF and Ares invested £400m in McLaren as part of a broader fundraising.
The latest deal forms part of efforts by McLaren's board - led by former Diageo chief Paul Walsh - to tidy up the automotive group's capital structure.
It is expected to follow the cancellation of the preference shares by raising further equity in the coming months.
PIF's exit as a shareholder in McLaren comes during a period when it has become the world's most prominent state-backed fund.
It has just engineered the proposed combination of the breakaway golf series, LIV, with the PGA Tour, while its vast financial firepower is strengthening its domestic football league to lure some of the world's best-known players.
Mumtalakat's own deep pockets are likely to be called on again as McLaren strengthens its balance sheet in the coming months.
Earlier this year, the group received a £70m funding boost from investors in the first stage of its wider restructuring plan aimed at steering it into the electric vehicle era.
McLaren was hit by delays to the delivery of its new Artura hybrid supercar, which - while garnering positive reviews - required a series of technical upgrades.
Those modifications were affected by the supply chain issues hampering global automotive production, forcing the Woking-based company to slow production and customer deliveries of the Artura until the end of last year.
It emerged late last year that Mumtalakat had acquired part of McLaren's valuable heritage car collection as part of a further £100m financial commitment to the business.
The most recent injection of funds have been earmarked for investment in McLaren Automotive, with its Racing subsidiary now a standalone entity within the group and not in need of additional financial support.
Last year, McLaren named former Ferrari executive Michael Leiters as the boss of its road-car division.
During the COVID-19 pandemic, the company was forced into a far-reaching restructuring that saw hundreds of jobs axed and substantial sums raised in equity and debt to repair its balance sheet.
In its racing division, which includes the Formula One cars driven this year by Lando Norris and Oscar Piastri, McLaren has also witnessed a turnaround under Zak Brown, who leads that arm of the company.
McLaren has also undertaken a series of corporate transactions since the start of the pandemic, when it sought a government loan - a request which was rebuffed by ministers.
Mr Walsh has also overseen the sale of a stake in McLaren Racing to a separate group of investors, as well as a £170m sale-and-leaseback of its spectacular Surrey headquarters.
In 2021, it also sold McLaren Applied Technologies, which generates revenue from sales to corporate customers.
Founded in 1963 by Bruce McLaren, the group possesses 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 Indianapolis 500s and the Le Mans 24 Hours on its debut.
The 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.
Mr Dennis offloaded his stake in a £275m deal following a bitter dispute with fellow shareholders.
McLaren and Mumtalakat declined to comment.
PIF could not be reached for comment.
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