Manchester
United's Singapore share listing would be a coup for the city-state, boosting
its profile as a centre for raising capital, but the sale could yet be delayed,
analysts said.
The Singapore Exchange (SGX) approved the
club's application last week but United, earlier reported to be aiming for a
float in October, are not yet fixing a date due to the turmoil in world
financial markets.
The English football giants decided to stage
their initial public offering (IPO) in Singapore after it offered more
favourable regulations allowing the controversial US-based Glazer family to
retain a firm grip on the club.
"I think the CEO of the Singapore
Exchange is doing everything that he can to get high profile listings in
Singapore, to increase the brand recognition of Singapore," said Jonathan
Galaviz, a US-based economist and consultant who tracks Singapore closely.
Hong Kong was the 19-time English champions'
first choice for a listing, but the Straits Times newspaper said SGX made a
last-minute dash to pitch Singapore as a better alternative.
According to sources familiar with the deal,
Singapore won partly because it allows a two-tier IPO, with one block of shares
that come with voting rights and another without.
As such, the Glazers' control over the club
will be less diluted than if all the IPO shares had votes. The arrangement is
not unprecedented but has been criticised by some investors, who say that equal
equity funders should have equal voting rights.
Sources involved in the deal say that sports
clubs "are quite different from most companies" and the structure
allows owners to make quick decisions, such as on player transfers.
SGX chief executive Magnus Bocker said that
existing listing rules allow non-voting preference stock to be sold as part of
an IPO, unlike having different classes of ordinary shares with different
voting rights.
Preference shares normally pay out a fixed
dividend -- similar to a bond -- that must be distributed before ordinary
shares can receive a dividend. They also have priority over ordinary shares in
the event of a liquidation.
With SGX approval out of the way, the IPO's
timing is now the issue.
The eurozone debt crisis and sluggish US
economic conditions have affected global investor sentiment in recent weeks,
taking stock indices on a roller-coaster ride reminiscent of the 2008 global
financial meltdown.
"Financial markets are currently going
through considerable stress," Rajiv Biswas, Asia-Pacific Chief Economist
at the IHS Global Insight consultancy in Singapore, told AFP.
But companies still need to raise funds and it
may take years for troubled western economies to tackle their problems, he
said.
As such, Singapore was a good place for the
IPO because "economic power is shifting from West to East, with Asian
countries becoming increasingly important sources of global capital
flows", Biswas said.
"This is particularly the case for Manchester
United, given the tremendous support for the Red Devils amongst fans throughout
the Asia-Pacific region and the club's plans to grow its Asian business."
Despite the club's successes on the pitch
under the Glazers, the family has become a divisive presence at Old Trafford
since their 2005 buyout in a deal that relied heavily on debt financing.
Still, the club, which has won Europe's top
club competition three times, topped business magazine Forbes' list as the
world's most valuable football club in 2010 with an estimated worth of US$1.86
billion.
Media reports have said United could raise $1
billion from an IPO of 30 per cent of its shares, valuing the company at more
than $3 billion -- more than 60 times its pre-tax net profit of about $48
million in the year to June 2011. It lost money in the previous year.
The approval marks a step in Singapore's
attempts to catch up with longtime rival Hong Kong, which has long overshadowed
the city-state as a capital market.
Hong Kong was the world's biggest IPO market
in 2010 for the second year in a row, as firms raised more than $50 billion in
the city including two monster sales by Asian insurer AIA and Agricultural Bank
of China.
SGX was meanwhile rebuffed by Australian
regulators in its highly publicised Aus$8.4 billion ($9.0 billion at current
exchange rate) bid for the Australian Securities Exchange (ASX).
But United's decision to list on the SGX came
not long after another Singapore coup, the $5.5-billion IPO earlier this year
of Hutchison Port Holdings Trust, the China port unit of Hong Kong conglomerate
Hutchison Whampoa.
"It's a great feather in the cap for
Singapore and SGX," said Matthew Gorman, Singapore-based partner and
capital markets specialist with international law firm Stephenson Harwood.
It is estimated that 190 million of Man Utd's
300 million supporters around the world are in Asia.
"Are there any businesses in any other
industries that have got that number of fans? Not many at all," said Kevin
Alavy, a London-based director of initiative with Futures Sport + Entertainment
consultancy.
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