Blackrock, others buy $1.6 bln stake in Formula One

Private equity firm CVC Capital has sold a $1.6 billion stake in Formula One to three investors including BlackRock ahead of the motor racing company's planned $3 billion initial public offering in Singapore, sources said on Tuesday.

The pre-IPO deal cuts CVC's stake in Formula One to about 40 percent from 63.4 percent, one of the sources said. The two other investors are asset manager Waddell & Reed  and Norway's Norges Bank Investment Management, the asset management unit of the Norwegian central bank, known as Norges Bank.

News of the F1 shareholders comes on the day when the company starts pre-marketing for its up to $3 billion Singapore IPO, expected to debut later in June.

The deal is the long awaited public floatation of a franchise led by octogenarian billionaire Bernie Ecclestone, the white-maned, colorful Briton of modest upbringing who was once a race car driver himself. Formula One holds 20 races around the world and has more than 500 million television viewers.

Finance Asia, which earlier reported the pre-IPO deal, said the transaction gives Formula One an enterprise value of about $9.1 billion including $7.2 billion of equity and $1.9 billion of debt.

"We view this (pre-IPO deal) as a validation of the company's valuation," one of the sources told Reuters.

Officials with investment manager BlackRock declined to comment and officials at Norges Bank and Waddell were not available for comment.

The company is seeking to raise at least $2.5 billion, vying to rank among the top IPOs in the world so far this year. Another Southeast Asia listing, Malaysia's Felda Global Ventures Holding, plans a $3 billion IPO this year. Facebook Inc raised $16 billion last week in a record Internet IPO.

The F1 IPO is set to be priced before the end of June after the company and its bankers meet with investors and fund managers to gauge demand for the offering.

"I don't think it's going to be priced cheaply," said Roger Tan, chief executive of SIAS Research. "There's a brand premium to it."

Formula One would join British luxury jeweler Graff Diamonds in braving equity markets despite a slump in global stocks. Graff started taking orders on Monday from institutional investors for its up to $1 billion Hong Kong IPO.

IPOs had their worst start in about four years in the Asia-Pacific region with overall equity market activity down about a fifth from 2011 as investors fretted at buying new shares because of falling markets.

MSCI's index for Asia ex-Japan has fallen about 9 percent over the past month on concerns over slower growth in China and the fallout from Europe's debt crisis. A source close to the Formula One deal said on May 12 the IPO could be delayed because of the ongoing market jitters.

Formula One could have its B+ long-term debt ratings lifted one notch after the IPO because of an expected improvement in its debt profile, Standard & Poor's said in a May 15 report when it put the company on "positive" watch.

The decision "mainly reflects our view that after the IPO in the next two to three years, Formula One's adjusted leverage is likely to lessen significantly and durably and that private equity sponsors will exit Formula One's capital in the medium term," S&P said in the report.