McLaren Group is set to be fully owned by Bahrain’s sovereign wealth fund as part of long-term intentions to forge an alliance with a major player in the global market.
Mumtalakat, the sovereign wealth fund of the Gulf state, is close to reaching an agreement with the remaining minority owners of McLaren to convert their equities into warrant-like instruments.
The deal might be revealed as early as this week and this will effectively make Mumtalakat the sole owner of McLaren.
The new contracts will not be classified as shares, but they will have the economic right to profit from a future “liquidity event” like McLaren’s IPO. It would leave the state of Bahrain as the only shareholder in the Formula 1 team-owning group and entail converting about 20% of McLaren’s shares into the new contracts.
Following an agreement made during the epidemic to acquire finance, McLaren Racing, the subsidiary that directly oversees the Formula 1 and other racing operations, does have its own external owners.
One insider claims that the agreement set to be finalized this week demonstrates Mumtalakat’s ongoing leadership and confidence in leading McLaren through its transformation.
In recent years, the Woking-based company’s complex capital structure has made it difficult for international automotive groups to establish a mutually beneficial relationship with it.
As McLaren moves closer to establishing itself as a hybrid and electric vehicle manufacturer, streamlining that structure should open the door for a technological cooperation with an automobile original equipment manufacturer (OEM) in years to come.
Although McLaren has been talking up the possibility of going public for years, an IPO is still probably a few years off due to the company’s ongoing need to raise money from its private shareholders and supply chain challenges that have slowed its recovery.
Mumtalakat purchased the McLaren shareholdings of Ares Management, a significant US-based financial investor, and Saudi Arabia’s national wealth fund earlier this year.
The Bahrain-based firm reportedly invested an additional £80 million in the company that produces the Artura supercar. However, McLaren experienced delivery delays with the Artura, which necessitated a number of technological modifications while receiving high ratings.
Michael Leiters, a former Ferrari executive, was appointed head of McLaren’s road car division last year.
The company was compelled to undergo a comprehensive restructuring during the COVID-19 epidemic, which resulted in the termination of hundreds of employees and an increase of huge amounts of debt and equity to boost its financial position.
McLaren has also seen success under Zak Brown, the company’s head of racing. This includes the Formula 1 cars that Lando Norris and Oscar Piastri raced this year.
Since the beginning of the pandemic, McLaren has also engaged in a number of business ventures. Initially, the company requested a government loan, but ministers rejected this request.
McLaren Group executive chairman Paul Steven Walsh oversaw the sale of a portion of McLaren Racing to a different set of investors along with overseeing the £170 million sale-and-leaseback of the company’s magnificent Surrey headquarters.
Additionally, in 2021, it sold McLaren Applied Technologies, a business that makes money by selling to corporates.
The organization is one of the most well-known in British motorsport and was founded in 1963 by Bruce McLaren. It has won the constructors’ championship eight times in its fifty years of Formula 1 racing with drivers including Mika Hakkinen, Lewis Hamilton, Alain Prost and Ayrton Senna.
McLaren’s wins include three Indianapolis 500s, 180 Grands Prix, and the Le Mans 24 Hours on its debut.
Following the departure of Ron Dennis in 2017, the company’s different divisions were merged. Dennis was the seasoned leader of McLaren, having guided the team through its most prosperous period in history. Dennis sold his ownership stake in a £275 million agreement after a bitter fallout with other shareholders.
