Bahrain’s sovereign wealth fund is gaining 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.
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.
One of the world’s largest investment groups is in talks to help finance a £550m takeover of The Daily Telegraph by the owner of The New York Sun.
Sky News has learnt that Apollo Global Management, which oversees assets worth $733bn, has been holding initial talks with Dovid Efune and his advisers in recent days about lending part of the money required for the deal.
Banking sources said on Tuesday that the discussions were preliminary in nature and might not lead to an agreement.
Other debt providers are also in talks with Mr Efune, the sources added.
The development has emerged just three days before an exclusivity period for the US-based businessman expires, although insiders say it is almost certain to be extended.
Apollo ranks among the world’s biggest financial institutions and is a major player in both private equity and private credit around the globe.
In the last fortnight, a string of media reports have cast doubt on Mr Efune’s ability to complete the deal, with potential lenders including Oaktree Capital Management and Hudson Bay Capital said to have withdrawn from the process.
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Sky News revealed at the start of November that the former Conservative chancellor Nadhim Zahawi and the party’s former treasurer, Sir Mohamed Mansour, had been enlisted by Mr Efune to aid his bid for the right-leaning newspapers.
Mr Zahawi, who has been tipped for a peerage in Rishi Sunak’s resignation honours list, and Sir Mohamed are expected to invest tens of millions of pounds in the deal if it goes ahead.
In September, Sky News revealed that Sir Mohamed had been approached to provide as much as £150m to a standalone bid for the Telegraph titles that were being spearheaded at the time by Mr Zahawi.
If completed, the transaction will crystallise an unlikely profit for RedBird IMI, the Abu Dhabi-backed vehicle which paid £600m to acquire a call option that was intended to convert into ownership of the Telegraph newspapers and The Spectator magazine.
Depending on the final structuring of the deal, it could be worth as much as £575m, with less than a third of that expected to be in the form of debt.
The Spectator was recently sold for £100m to Sir Paul Marshall, the hedge fund billionaire, who has installed Michael Gove, the former cabinet minister, as its editor.
Insiders said that Mr Zahawi was likely to be handed an ongoing role at the Telegraph if the bid from Mr Efune was successful.
The former chancellor, education secretary and vaccines minister has been involved in the Telegraph process in various guises, initially helping broker a deal with RedBird IMI before assembling his own offer.
He has close connections to many of the Gulf-based figures involved in the process, including Sultan Ahmed al-Jaber, chairman of the bidding vehicle.
Mr Zahawi has also since been named chairman of Very Group, the online retailer owned by the Barclay family which controlled the Telegraph for two decades, and which is now part-funded by IMI.
The UAE-based IMI, which is controlled by the UAE’s deputy prime minister and ultimate owner of Manchester City Football Club, Sheikh Mansour bin Zayed Al Nahyan, extended a further £600m to the Barclays to pay off a loan owed to Lloyds Banking Group, with the balance secured against other family assets.
Mr Efune’s bid has raised the extraordinary possibility of a return to the British newspaper group for Conrad Black, its former proprietor, Sky News reported earlier in the autumn.
Other bidders for the Telegraph included National World, the London-listed vehicle headed by former Mirror newspapers chief David Montgomery, and Lord Saatchi, the former advertising mogul, who offered £350m.
Lord Rothermere, the Daily Mail proprietor, pulled out of the bidding earlier in the summer amid concerns that he would be blocked on competition grounds.
The Telegraph auction is being run by Raine Group and Robey Warshaw, the advisers to the Abu Dhabi-backed entity which was thwarted in its efforts to buy the media titles by a change in ownership law.
Vauxhall will close its Luton plant in April, the parent company Stellantis announced.
More than 1,100 jobs at the van-making factory are at risk, but Stellantis said it is hoping to transfer “hundreds” of Luton jobs to the group’s Vauxhall site in Ellesmere Port.
It is now in consultation with unions and employees over the proposals, which will also see it invest £50m into the Ellesmere Port factory.
The company said it would offer “relocation support” and “an attractive package” to sacked employees who want to transfer to Ellesmere Port in the North West of England from Luton, north of London.
The closure had been warned of by the company’s managing director Maria Grazia Davino. In June she told an industry event, “Stellantis production in the UK could stop”, as more needs to be done to spur consumer demand for electric vehicles.
An industry-wide phenomenon
It is the second British car producer to announce job losses in less than a week. Just six days ago Ford revealed plans to cut 800 roles in the UK as part of a cull of 4,000 jobs across Europe.
Pressures have been on UK car makers to meet the government’s electric car mandate with talks on the 2030 deadline taking place between government and industry.
Financial penalties are currently levied against manufacturers if zero-emission vehicles make up less than 22% of all sales. This will rise to 80% of all sales by 2030 and 100% by 2035.
Across Europe, the automotive sector has been feeling the pressure of slowed sales and competition from China. On Friday, Bosch – the world’s biggest car parts supplier – reported the loss of 5,500 jobs, predominantly in Germany.
A government spokesperson said: “We have a longstanding partnership with Stellantis and we will continue to work closely with them, as well as trade unions and local partners on the next steps of their proposals.
“The government is also backing the wider industry with over £300m to drive uptake of zero-emission vehicles and £2bn to support the transition of domestic manufacturing.”
The figures may signal the end of falling inflation given cost pressures being placed on big businesses, according to BRC chief executive Helen Dickinson.
Retailers face a barrage of costs which the BRC forecasts will amount to an extra £7bn for retail businesses next year.
If the government wants to prevent higher shop prices it must reconsider the April 2025 timeline for the new packaging levy and reduce the commercial property tax known as business rates “as early as possible”, Ms Dickinson added.
The minimum wage uplift will bring pay for people over 21 to £12.21 an hour and take effect in April. People aged 18 to 20 will have to earn at least £10 an hour – something the TUC (Trades Union Congress) said could benefit 420,000 young people – as part of the government’s goal of paying the same minimum wage to all workers, regardless of age.
Also from April, employers will have to pay more national insurance for their staff.
Businesses’ national insurance contributions will increase from 13.8% to 15% with the current £9,100 threshold at which employers start to pay the tax on employees’ earnings lowering to £5,000.
Chancellor Rachel Reeves has defended the increase saying half of all businesses – roughly a million firms – are paying either less or the same national insurance contributions as they were before the budget due to the uprated employment allowance, a tax credit for some employers.