Saudi state fund buys McLaren stake in £550m deal

Published

4 years ago

July 16, 2021

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Saudi Arabia’s sovereign wealth fund is in advanced talks to acquire a stake in McLaren Group as part of a fresh shake-up at the British supercar manufacturer and Formula One (F1) team-owner.

Sky News has learnt that the Saudi Public Investment Fund (PIF) is to participate in a £550m equity-raise which could be unveiled by McLaren within days.

Banking sources said the deal would include £400m of new capital from PIF and Ares Management, a major global investment firm, with £150m being injected into the company by McLaren’s existing shareholders – who include Mumtalakat, the sovereign investment fund of Bahrain.

The equity-raise was still being finalised on Friday and could still be delayed, the sources cautioned.

If completed, however, it would represent a major vote of confidence in McLaren’s strategy under the leadership of Paul Walsh, the former Diageo chief who joined last year as executive chairman.

The Woking-based company endured a torrid start to the pandemic as it sought a government loan to shore up its balance sheet.

It was also forced into a restructuring of its workforce which saw hundreds of jobs axed.

Sales of its luxury road-cars have, however, rebounded strongly in recent months, while its racing fortunes have also continued to recover.

The Saudis’ acquisition of a minority stake in McLaren Group could pave the way for a series of commercial tie-ups involving the company and the oil-rich Gulf state, one analyst suggested on Thursday evening.

The PIF has also been part of a consortium attempting to buy Newcastle United Football Club from the retail tycoon Mike Ashley – a role which has attracted intense scrutiny from the Premier League and triggered a formal arbitration process that is expected to be resolved this month.

The Saudi fund has been a big investor in technology companies, in part through the giant Vision Fund led by Japan’s SoftBank, and also through individual companies such as the electric vehicle start-up Lucid Motors, which it listed in New York earlier this year.

Its experience with Lucid could be of benefit to McLaren as it develops more hybrid and electric cars such as its Artura model.

Ares Management is regarded as a blue-chip provider of capital to companies around the world, and has an existing relationship with McLaren, according to insiders.

The equity-raise will allay any lingering questions about the strength of McLaren’s balance sheet and will take the total funding raised by the group since Mr Walsh’s arrival to well over £1bn.

That figure comprises a £300m equity injection in March 2020, a £170m sale-and-leaseback of its spectacular Surrey headquarters and a £185m windfall from the sale of a separate stake in McLaren Racing.

McLaren also secured a £150m loan from the National Bank of Bahrain, reflecting its close ties to the Gulf state, last year.

The sale of a stake in McLaren Racing, which comprises its F1 team and INDYCAR Championship outfit, came during a revival in its on-track fortunes after years in the doldrums.

Lando Norris, one of its F1 drivers, sits in fourth place in the drivers’ championship, with team-mate Daniel Ricciardo lying in eighth.

The team, which is overseen by McLaren Racing chief executive Zak Brown, occupies third spot in the constructors’ championship behind Red Bull and Mercedes.

As well as its racing arm, the group consists of McLaren Automotive, which makes luxury road cars and which was highly profitable prior to the COVID-19 crisis; and McLaren Applied Technologies, which generates revenue from sales to corporate customers.

Founded in 1963 by Bruce McLaren, the car marque is 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 Indianopolis 500s and the Le Mans 24 Hours on its debut.

This weekend, it will compete in the British Grand Prix at Silverstone.

McLaren’s on-track operations account for roughly 20% of the group’s annual revenues.

It has sponsorship deals with companies including Darktrace, the cybersecurity software provider, Dell Technologies, the computing giant, and – as of this week – Stanley Black & Decker, the tool manufacturer.

McLaren is a major British exporter, directly employing about 3000 people and supporting thousands of jobs across the UK supply chain.

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.

He became one of Britain’s best-known businessmen, expanding McLaren’s technology ventures into a wide range of other industries through lucrative commercial partnerships.

Mr Dennis offloaded his stake in a £275m deal following a bitter dispute with fellow shareholders.

He had presented to McLaren’s board a £1.65bn takeover bid from a consortium of Chinese investors, but did not attract support for it from boardroom colleagues.

HSBC and Goldman Sachs are advising on the latest equity-raise.

McLaren did not respond to a request for comment on Friday morning.

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Tesla approves $29bn share award to Elon Musk

Published

7 hours ago

August 4, 2025

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Tesla approves bn share award to Elon Musk

Tesla’s board has signed off a $29bn (£21.8bn) share award to Elon Musk after a court blocked an earlier package worth almost double that sum.

The new award, which amounts to 96 million new shares, is not just about keeping the electric vehicle (EV) firm’s founder in the driving seat as chief executive.

The new stock will also bolster his voting power from a current level of 13%.

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He and other shareholders have long argued that boosting his interest in the company is key to maintaining his focus after a foray into the trappings of political power at Donald Trump‘s side – a relationship that has now turned sour.

Musk is angry at the president’s tax cut and spending plans, known as the big beautiful bill. Tesla has also suffered a sales backlash as a result of Musk’s past association with Mr Trump and role in cutting federal government spending.

The company is currently focused on the roll out of a new cheaper model in a bid to boost flagging sales and challenge steep competition, particularly from China.

The headwinds have been made stronger as the Trump administration has cut support for EVs, with Musk admitting last month that it could lead to a “few rough quarters” for the company.

Tesla is currently running trials of its self-driving software and revenues are not set to reflect the anticipated rollout until late next year.

Musk had been in line for a share award worth over $50bn back in 2018 – the biggest compensation package ever seen globally.

But the board’s decision was voided by a judge in Delaware following a protracted legal fight. There is still a continuing appeal process.

Earlier this year, Tesla said its board had formed a special committee to consider some compensation matters involving Musk, without disclosing details.

The special committee said in the filing on Monday: “While we recognize Elon’s business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging… we are confident that this award will incentivize Elon to remain at Tesla”.

It added that if the Delaware courts fully reinstate the 2018 “performance award”, the new interim grant would either be forfeited or offset to ensure no “double dip”.

The new compensation package is subject to shareholder approval.

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Motor finance operators can breathe big sigh of relief

Published

7 hours ago

August 4, 2025

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Motor finance operators can breathe big sigh of relief

Bank stocks have enjoyed a boost as traders digest the Supreme Court’s ruling on the car finance scandal.

Some of the country’s most exposed lenders, including Lloyds and Close Brothers, saw their share prices jump by 7.55% and 21.62% respectively.

It came after the court delivered a reprieve from a possible £44bn compensation bill.

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Banks will still most likely have to fork out over discretionary commissions – a type of commission for dealers that was linked to how high an interest rate they could get from customers.

The FCA, which banned the practice in 2021, is currently consulting on a redress scheme but the final bill is unlikely to exceed £18bn. Overall, the result has been better than expected for the banks.

Lloyds, which owns the country’s largest car finance provider Black Horse, had set aside £1.2bn to cover compensation payouts.

Following the judgment, the bank said it “currently believes that if there is any change to the provision, it is unlikely to be material in the context of the group”.

The judgment released some of the anxiety that has been weighing over the Bank’s share price.

Jonathan Pierce, banking analyst at Jefferies, said the FCA’s prediction was “consistent with our estimates, and most importantly, we think it largely de-risks Lloyds’ shares from the ‘motor issue'”.

Bank stocks have responded robustly to each twist and turn in this tale, sinking after the Court of Appeal turned against them and jumping (as much as 8% in the case of Close Brothers) when the Supreme Court allowed the appeal hearing.

Concerns about this volatility motivated the Supreme Court to deliver its judgment late in the afternoon so that traders would have time to absorb the news.

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FCA considering compensation scheme over car finance scandal – raising hopes of payouts for motorists

Published

1 day ago

August 3, 2025

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FCA considering compensation scheme over car finance scandal - raising hopes of payouts for motorists

Thousands of motorists who bought cars on finance before 2021 could be set for payouts as the Financial Conduct Authority (FCA) has said it will consult on a compensation scheme.

In a statement released on Sunday, the FCA said its review of the past use of motor finance “has shown that many firms were not complying with the law or our disclosure rules that were in force when they sold loans to consumers”.

“Where consumers have lost out, they should be appropriately compensated in an orderly, consistent and efficient way,” the statement continued.

The FCA said it estimates the cost of any scheme, including compensation and administrative costs, to be no lower than £9bn – adding that a total cost of £13.5bn is “more plausible”.

It is unclear how many people could be eligible for a pay-out. The authority estimates most individuals will probably receive less than £950 in compensation.

The consultation will be published by early October and any scheme will be finalised in time for people to start receiving compensation next year.

What motorists should do next

The FCA says you may be affected if you bought a car under a finance scheme, including hire purchase agreements, before 28 January 2021.

Anyone who has already complained does not need to do anything.

The authority added: “Consumers concerned that they were not told about commission, and who think they may have paid too much for the finance, should complain now.”

Its website advises drivers to complain to their finance provider first.

If you’re unhappy with the response, you can then contact the Financial Ombudsman.

The FCA has said any compensation scheme will be easy to participate in, without drivers needing to use a claims management company or law firm.

It has warned motorists that doing so could end up costing you 30% of any compensation in fees.

The announcement comes after the Supreme Court ruled on a separate, but similar, case on Friday.

The court overturned a ruling that would have meant millions of motorists could have been due compensation over “secret” commission payments made to car dealers as part of finance arrangements.

The FCA’s case concerns discretionary commission arrangements (DCAs) – a practice banned in 2021.

Under these arrangements, brokers and dealers increased the amount of interest they earned without telling buyers and received more commission for it. This is said to have then incentivised sellers to maximise interest rates.

In light of the Supreme Court’s judgment, any compensation scheme could also cover non-discretionary commission arrangements, the FCA has said. These arrangements are ones where the buyer’s interest rate did not impact the dealer’s commission.

This is because part of the court’s ruling “makes clear that non-disclosure of other facts relating to the commission can make the relationship [between a salesperson and buyer] unfair,” it said.

It was previously estimated that about 40% of car finance deals included DCAs while 99% involved a commission payment to a broker.

Nikhil Rathi, chief executive of the FCA, said: “It is clear that some firms have broken the law and our rules. It’s fair for their customers to be compensated.

“We also want to ensure that the market, relied on by millions each year, can continue to work well and consumers can get a fair deal.”