Bahrain’s sovereign wealth fund is taking full ownership of McLaren Group, one of the most revered names in British premium manufacturing, as part of long-term plans to secure a partnership with a global industry giant.
Sky News has learnt that Mumtalakat, the Gulf state’s investment fund, is on the brink of a deal with McLaren’s remaining minority shareholders to convert their equity into warrant-like instruments.
The new contracts will have the economic rights to benefit from a future ‘liquidity event’ such as an initial public offering of McLaren, but would not be classed as shares.
One banking source said they expected that the agreement could be announced later this week.
It would involve roughly 20% of the equity in McLaren being converted into the new contracts, and leave the state of Bahrain as the Formula One team-owning group’s sole shareholder.
McLaren Racing, the division which directly houses the F1 and other racing operations, does have its own external shareholders following a deal struck during the pandemic to raise capital.
The deal to be signed this week underlines the continued confidence and leadership of Mumtalakat in driving McLaren’s turnaround, according to one insider.
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The Woking-based company’s convoluted capital structure has acted as a deterrent to global automotive groups’ ability to structure a long-term partnership with it in recent years.
Simplifying that structure is likely to pave the way for a technology partnership with an automotive original equipment manufacturer (OEM) in the coming years as McLaren transitions towards becoming a hybrid and electric vehicle company.
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Bankers have talked up the prospect of a McLaren public listing for years, but its repeated need to tap its private shareholders for funding, and the supply chain challenges which have hindered its recovery, mean that an IPO is still likely to be several years away.
Image: McLaren centres its operations in Woking, Surrey. Pic: McLaren
Earlier this year, Mumtalakat acquired the McLaren shareholdings of Saudi Arabia’s sovereign wealth fund and Ares Management, a major US-based financial investor.
More recently, the Bahrain-based fund was reported to have injected another £80m into the company, which makes the Artura super-car.
McLaren was hit by delays to the delivery of the Artura, which – while garnering positive reviews – has required a series of technical upgrades.
Last year, McLaren named former Ferrari executive Michael Leiters as the boss of its road-car division.
During the COVID-19 pandemic, the company was forced into a far-reaching restructuring that saw hundreds of jobs axed and substantial sums raised in equity and debt to repair its balance sheet.
In its racing division, which includes the Formula One cars driven this year by Lando Norris and Oscar Piastri, McLaren has also witnessed a turnaround under Zak Brown, who leads that arm of the company.
McLaren has also undertaken a series of corporate transactions since the start of the pandemic, when it sought a government loan – a request which was rebuffed by ministers.
Mr Walsh has overseen the sale of a stake in McLaren Racing to a separate group of investors, as well as a £170m sale-and-leaseback of its spectacular Surrey headquarters.
In 2021, it also sold McLaren Applied Technologies, which generates revenue from sales to corporate customers.
Founded in 1963 by Bruce McLaren, the group’s name is among the most famous 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 Indianapolis 500s and the Le Mans 24 Hours on its debut.
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.
Mr Dennis offloaded his stake in a £275m deal following a bitter dispute with fellow shareholders.
Donald Trump’s trade war escalation has sparked a global sell-off, with US stock markets seeing the biggest declines in a hit to values estimated above $2trn.
Tech and retail shares were among those worst hit when Wall Street opened for business, following on from a flight from risk across both Asia and Europe earlier in the day.
Analysis by the investment platform AJ Bell put the value of the peak losses among major indices at $2.2trn (£1.7trn).
The tech-focused Nasdaq Composite was down 5.8%, the S&P 500 by 4.3% and the Dow Jones Industrial Average by just under 4% at the height of the declines. It left all three on course for their worst one-day losses since at least September 2022 though the sell-off later eased back slightly.
Analysts said the focus in the US was largely on the impact that the expanded tariff regime will have on the domestic economy but also effects on global sales given widespread anger abroad among the more than 180 nations and territories hit by reciprocal tariffs on Mr Trump‘s self-styled “liberation day”.
They are set to take effect next week, with tariffs on all car, steel and aluminium imports already in effect.
Price rises are a certainty in the world’s largest economy as the president’s additional tariffs kick in, with those charges expected to be passed on down supply chains to the end user.
The White House believes its tariffs regime will force employers to build factories and hire workers in the US to escape the charges.
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The latest numbers on tariffs
Economists warn the additional costs will add upward pressure to US inflation and potentially choke demand and hiring, ricking a slide towards recession.
Apple was among the biggest losers in cash terms in Thursday’s trading as its shares fell by almost 9%, leaving it on track for its worst daily performance since the start of the COVID pandemic.
Concerns among shareholders were said to include the prospects for US price hikes when its products are shipped to the US from Asia.
Other losers included Tesla, down by almost 6% and Nvidia down by more than 6%.
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PM: It’s ‘a new era’ for trade and economy
Many retail stocks including those for Target and Footlocker lost more than 10% of their respective market values.
The European Union is expected to retaliate in a bid to put pressure on the US to back down.
The prospect of a tit-for-tat trade war saw the CAC 40 in France and German DAX fall by more than 3.4% and 3% respectively.
The FTSE 100, which is internationally focused, was 1.6% lower by the close – a three-month low.
Financial stocks were worst hit with Asia-focused Standard Chartered bank enduring the worst fall in percentage terms of 13%, followed closely by its larger rival HSBC.
Among the stocks seeing big declines were those for big energy as oil Brent crude costs fell back by 6% to $70 due to expectations a trade war will hurt demand.
The more domestically relevant FTSE 250 was 2.2% lower.
A weakening dollar saw the pound briefly hit a six-month high against the US currency at $1.32.
There was a rush for safe haven gold earlier in the day as a new record high was struck though it was later trading down.
Sean Sun, portfolio manager at Thornburg Investment Management, said of the state of play: “Markets may actually be underreacting, especially if these rates turn out to be final, given the potential knock-on effects to global consumption and trade.”
He warned there was a big risk of escalation ahead through countermeasures against the US.
Sandra Ebner, senior economist at Union Investment, said: “We assume that the tariffs will not remain in place in the announced range, but will instead be a starting point for further negotiations.
“Trump has set a maximum demand from which the level of tariffs should decrease”.
She added: “Since the measures would not affect all regions and sectors equally, there will be winners and losers as in 2018 – although the losers are more likely to be in the EU than in North America.
“To protect companies in Europe from the effects of tariffs, the EU should not respond with high counter-tariffs. In any case, their impact in the US is not likely to be significant. It would be more efficient to provide targeted support to EU companies in the form of investment and stimulus.”
British companies and business groups have expressed alarm over President Donald Trump’s 10% tariff on UK goods entering the US – but cautioned against retaliatory measures.
It comes as Business Secretary Jonathan Reynolds launched a consultation with firms on taxes the UK could implement in response to the new levies.
A 400-page list of 8,000 US goods that could be targeted by UK tariffs has been published, including items like whiskey and jeans.
On so-called “Liberation Day”, Mr Trump announced UK goods entering the US will be subject to a 10% tax while cars will be slapped with a 25% levy.
The government’s handling of tariff negotiations with the US to date has been praised by representative and industry bodies as being “cool” and “calm” – and they urged ministers to continue that approach by not retaliating.
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Business lobby group the CBI (Confederation of British Industry) said: “Retaliation will only add to supply chain disruption, slow down investment, and stoke volatility in prices”.
Industry body the British Retail Consortium (BRC) also cautioned: “Retaliatory tariffs should only be a last resort”.
‘Deeply troubling’
While a major category of exports, in the form of services – like finance and information technology (IT) – has been exempted from the tariffs, the impact on UK business is expected to be significant.
Mr Trump’s announcement was described as “deeply troubling for businesses” by the CBI’s chief executive Rain Newton-Smith.
The Federation of Small Businesses (FSB) also said the tariffs were “a major blow” to small and medium companies (SMEs), as 59% of small UK exporters sell to the US. It called for emergency government aid to help those affected.
“Tariffs will cause untold damage to small businesses trying to trade their way into profit while the domestic economy remains flat,” the FSB’s policy chair Tina McKenzie said. “The fallout will stifle growth” and “hurt opportunities”, she added.
Companies will need to adapt and overcome, the British Export Association said, but added: “Unfortunately adaptation will come at a cost that not all businesses will be able to bear.”
Watch dealer and component seller Darren Townend told Sky News the 10% hit would be “painful” as “people will buy less”.
“I am a fan of Trump, but this is nuts,” he said. “I expect some bad months ahead.”
Industry body Make UK said the 25% tariffs on cars, steel and aluminium would in particular be devastating for UK manufacturing.
Cars hard hit
Carmakers are among the biggest losers from the world trade order reshuffle.
Auto industry body the Society of Motor Manufacturers and Traders (SMMT) said the taxes were “deeply disappointing and potentially damaging measure”.
“These tariff costs cannot be absorbed by manufacturers”, SMMT chief executive Mike Hawes said. “UK producers may have to review output in the face of constrained demand”.
The new taxes on cars took effect on Thursday morning, while the measures impacting car parts are due to come in on 3 May.
Economists immediately started scratching their heads when Donald Trump raised his tariffs placard in the Rose Garden on Wednesday.
On that list he detailed the rate the US believes it is being charged by each country, along with its response: A reciprocal tariff at half that rate.
So, take China for example. Donald Trump said his team had run the numbers and the world’s second-largest economy was implementing an effective tariff of 67% on US imports. The US is responding with 34%.
How did he come up with that 67%? This is where things get a bit murky. The US claims it studied its trading relationship with individual countries, examining non-tariff barriers as well as tariff barriers. That includes, for example, regulations that make it difficult for US exporters.
However, the actual methodology appears to be far cruder. Instead of responding to individual countries’ trade barriers, Trump is attacking those enjoying large trade surpluses with the US.
A formula released by the US trade representative laid this bare. It took the US’s trade deficit in goods with each country and divided that by imports from that country. That figure was then divided by two.
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So, in the case of China, which has a trade surplus of $295bn on total US exports of $438bn, that gives a ratio of 68%. The US divided that by two, giving a reciprocal tariff of 34%.
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PM will ‘fight’ for deal with US
This is a blunt measure which targets big importers to the US, irrespective of the trade barriers they have erected. This is all part of Donald Trump’s efforts to shrink the country’s deficit – although it’s US consumers who will end up paying the price.
But what about the small number of countries where the US has a trade surplus? Shouldn’t they actually be benefiting from all of this?
That includes the UK, with whom the US has a surplus (by its own calculations) of $12bn. By its own reciprocal tariff formula, the UK should be benefitting from a “negative tariff” of 9%.
Instead, it has been hit by a 10% baseline tariff. Number 10 may be breathing a sigh of relief – the US could, after all, have gone after us for our 20% VAT rate on imports, which it takes issue with – but, by Trump’s own measure, we haven’t got off as lightly as we should have.