Manchester United IPO at USA instead of Singapore

Posted on July 5, 2012 by SoccerPunter

Asian supporters on Wednesday said Manchester United may have scored an own-goal by opting to take out a US share listing rather than tapping their fanatical fan base in the region for funds.

The legendary English football club, which says it has 325 million Asian followers out of a global total of almost 700 million, had received in-principle approval for an initial public offering (IPO) in Singapore.

But the debt-ridden club – which finished an agonising second in the Premier League last season behind local rivals Manchester City – filed papers in the United States on Tuesday to set the stage for the share float.

“It is disappointing that the club is not raising funds in Asia,” said Sean Seah, a securities trader and Red Devils fan in Malaysia’s capital Kuala Lumpur.

He said United – ranked by business magazine Forbes as the world’s most valuable football team in 2011 – may not make as much money from a US listing as they might have done in Asia.

“If the Red Devils float their shares in Asia, supporters will swamp it. It is simple. Manchester United supporters are familiar with the team. Owning shares (in it) will be akin to having a souvenir or collectible,” Seah said.

“I do not think the stock will perform well in the US, where interest for football is less, unlike across Asia.”

The team has been controlled since 2005 by the Glazer family – billionaire US sports investors who own American football’s Tampa Bay Buccaneers – and has struggled in recent years with heavy debts despite its huge popularity.

In its listing papers, United said as of March 31, club liabilities were down to 606 million pounds ($950 million) and debt was 423 billion pounds.

Profits for the nine months to March 31 were 38 million pounds, nearly triple the figure a year earlier.

The club’s IPO prospectus said that “we believe our global reach and access to emerging markets positions us for continued growth”.

It also gave a pro-forma amount of $100 million as the target for the share issue, but recent reports about abortive attempts to list in Asia said the Glazers were aiming to bring in as much as $1 billion.

Hong Kong, the financial gateway to football-mad China, had also been considered for the IPO but Singapore was the odds-on favourite to clinch the deal right up to Tuesday’s announcement.

The Singapore and Hong Kong stock exchanges had no immediate comment.

“I’m disappointed,” said Ken Lai, chairman of United for United, the team’s official supporters’ club in Singapore.

“It would have been nearer to us, it would have been a great honour to Singapore to actually host this,” he said, while admitting that he would still be keen to buy shares from the US listing.

But Justin Harper, a market strategist for financial firm IG Markets in Singapore, said prudence may have swung United’s decision.

“It’s more about the economics of stability rather than the actual potential… the US economy’s the biggest in the world and less volatile (than Asia),” he told AFP.

“They’re taking the cautious approach at the moment. Rather than doing something exciting and coming to Asia and Singapore, they’re going for the tried and tested.”

However, Harper said that listing in the United States still carried two risks.

“Number one, Americans are wary of sports franchises and how profitable they are. Number two, when it comes to kicking a ball as opposed to throwing and bouncing it, they’re less certain about the prospects.”