Williams planning stock market flotation

2011 F1 season

Williams

Williams logo on the FW32

Williams are planning a public share issue on the stock market.

The team’s chairman Adam Parr said the move was to preserve the long-term future of the team and denied a flotation would be to raise money.

A statement issued by Frank Williams on behalf of the team said:

For some years i have been considering how to secure the long-term ownership of Williams such that it will remain true to the aims with which Patrick and I established the team back in 1977.

My goal then was to race in Formula 1 as an independent constructor. This was and is my great passion and I will race for as long as I will continue to be blessed with good health.

It is also my desire that the team is in good shape to go on racing long after I am gone. To that end it is prudent and necessary to plan for an ownership structure that would enable Williams to be an independent constructor, owned and staffed by people committed to Formula 1, and the sound business practices which have supported over three decades.

I have concluded that the option that will best achieve this is to broaden our shareholder base with public shareholders while having a stable core of long-term investors closely involved in the running of the team. This will ensure stability, good governance and will, I believe enable us to attract and retain the best people and partners.

Patrick, Toto and I are therefore examining this option closely and if the environment is propitious we may act in the near future. Regardless of whatever steps we take, I shall remain the majority and controlling shareholder and the team principal of AT&T Williams.

Parr explained why the team was looking towards a share issue rather than finding a buyer:

We’re constantly being approached by people who are interested in acquiring the team.

The bottom line is most of those people want control and our sense is that, first of all, that is not available. Frank absolutely wishes to maintain control of his team and, to be honest with you, I think people who look at buying and controlling a Formula 1 team often feel that they can run it and our sense that it is a quite specialised business and sport.

Also, one worries that a shareholder like that might lose interest and thereby put the whole team in danger. So, yes, we have been approached, we have considered other options and this is by far the strongest.
Adam Parr

He added that Frank Williams was in good health and said Frank and Patrick Head will remain stakeholders in the team.

Williams issued a Q&A with Parr:

Q. It sounds like Williams is considering a flotation on the stock exchange. Would that be correct?
ASP. Yes, it would be correct to say that Williams F1 is considering a flotation on the stock exchange. At this stage, all we have concluded is that it is the best way to secure the future of the team and its 450 employees.

Q. What is the timetable?
ASP. As the plan develops we will provide further information.

Q. Is retirement a current consideration for Frank?
ASP. No. Retirement is categorically not on Frank?s agenda. Anyone who knows Frank knows this.

Q. Are there any concerns surrounding Frank?s health?
ASP. No. Frank?s health is absolutely fine.

Q. What other options have the Board investigated?
ASP. We have had many approaches in the past, but none have offered the same benefits as this route.

Q. Toto Wolff invested in the team in November 2009. What is his future role?
ASP. Toto is a non-executive director and a significant shareholder in the company. He has already established himself as an important part of the team and he will play a central role in its future.

Q. If Williams were to go public, what are the implications for the team?s partners and relations with the FIA and FOM?
ASP. The team has always enjoyed honest and open relationships with its partners, the governing body of the sport and the commercial rights-holder. Whether we are a public or private company, this will not change.

Q. Would any flotation involve raising funds for the company?
ASP. No.

Q. Does Williams F1 have the financial track record to support a flotation?
ASP. Yes, we believe we do. The company has always been run on sound financial principles. In spite of the economic environment in recent years, we have turned a profit and generated positive cash-flow from operating activities in 2008, 2009 and 2010 and we have a fully contracted budget for 2011.

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37 comments on Williams planning stock market flotation

  1. Icthyes (@icthyes) said on 21st January 2011, 11:57

    Very interesting. Are any other F1 teams on the stock market?

    • Browny (@browny) said on 21st January 2011, 14:03

      I’d be surprised if any actual teams are, obvioulsy company run teams i.e McLaren, Mercedes, Red Bull, Virgin etc are obvioulsy on their respective stock markets, but as for actual teams I doubt it. I know here in Australia a couple of Rugby League sides are on the stock market

    • BasCB (@bascb) said on 21st January 2011, 14:39

      The closest is possibly Mercedes as its 100% owner car company is on there. Not sure, weather Ferrari owners FIAT don’t have part of their stocks publicly traded as well.

  2. David B said on 21st January 2011, 11:58

    Not good news.
    I don’t like when sport companies (as soccer teams, or others) enter stock market.
    The only think I know about stock market is that it is very hard to predict. Wouldn’t like if my favorite F1 team didn’t know who is the actual owner, or whether they will have the money to develop some new parts, or whether they will be able to pay drivers and technicians…

    Am I too simple?

    • skodarap (@skodarap) said on 21st January 2011, 13:08

      Yeah, I think you got it wrong :D

      Anyway, as far as I understood, they are releasing just a small amount of shares so probably not much will change (Frank said he shall remain the major shareholder – last sentence in his letter).

    • Bertie said on 21st January 2011, 15:29

      If they are the majority share holder they have all the power. And they will be. They will have a board to please but I cant see that causing any problems because the goals will be the same for everyone – win. I suppose in one sense it may lead to more pay drivers since shareholders will prefer the money now. Although with the extra capital raised there is less need to have them. Basically I don’t think it will make any difference at all.

      • Dave Blanc said on 21st January 2011, 23:20

        I actually think this will be a good thing for Williams. If you are accountable to external shareholders then you have to deliver and be successful and make money. I’ll be interested to see the PDS (mandatory document that you need to issue as part of a share issue) as they will have to disclose their forecasts which have to be reviewed by a third party firm of accountants. These forecasts will need to stipulate anticipated R&D, expected constructors position etc as this drives their forecast cashflows…. So whilst they are privately owned they talk up what they are doing and where they expect to be, but when you are listed you need to stick to the facts! Very interesting…

  3. David B said on 21st January 2011, 12:04

    If there’s some financial expert among you he will start laughing!!! :-DDD

  4. Williams dropping Nico H for his significantly worse 2009 GP2 teammate + cash does not make Williams a good stock for investment imo.
    Can you see them winning races and beating the very stiff competition with this kind of outlook? More success results wise is what most would put their hopes on for the monetary value of Williams to increase. In which case it is an investment for fans who want a stake rather than good returns, not investors imo.

    • skodarap (@skodarap) said on 21st January 2011, 13:18

      Where you got that info about Maldonaldo being significantly worse than Nico?

      F1 and GP2 are two completely different worlds. Kobayashi for example was 16th in GP2 championship in 2008 and 2009 (in both seasons he was also a lot worse than his teammate), and yet in F1 he proved to be a much better driver than Nico H (10 pts more at the end of the season in a worse car).

      • Unless Pastor gets a pole and/or significantly beats Rubens, I don’t see him being better (or even on the same level) as Hulk.

        • George (@george) said on 21st January 2011, 17:21

          Oh please, he has no chance of lucking into a pole position. Hulkenberg didn’t signficantly beat Rubens either, I dont understand what you’re basing these requirements on.

          We dont even know how good the car will be, perhaps the new Williams will be the class of the field and he’ll get 10? ;)

          • Hulk was right up with Rubens all year, still a Rookie, but an impressive rookie.

            Paster has a big job to impress.

          • skodarap (@skodarap) said on 22nd January 2011, 0:28

            True, Hulk was ok (I wouldn’t call him impressive though), but let’s see Pastor on track first before calling him worse than Hulk.

  5. topdowntoedown (@topdowntoedown) said on 21st January 2011, 12:32

    OK – this is a subject I do actually know something about :D

    As someone noted above there are no other F1 teams on the stock market, but there are ‘sports businesses’. Until recently Manchester United, Manchester City and Newcastle United were all listed; Arsenal still are (on a minor stock exchange rather than the main London market).

    They’ve stated that the aim is not to raise funding, but to ensure ‘succession planning’ – I read this as meaning that interested parties will be able to buy a stake in the team quietly and anonymously. It’s entirely normal for there to be a level where there’s no need to declare who owns the stake. And for a company like, say, Volkswagen… that’s a nice subtle way in.

    • bosyber (@bosyber) said on 21st January 2011, 13:11

      Oh, that’s a good point!

      I can see the issue with being taken over and worrying that it then turns out to be harder than thought to run a team – witness Honda, BMW, Spyker, Midlands who all had trouble reaching their goals because continued cashflow and success were hard to attain.

      But I don’t understand this stock market flotation well enough to see how it prevents this, unless there is a maximum in the of shares that any one can own other than Frank Williams and Patrick Head, or Toto Wolff.

      • Adrian J (@adrian-j) said on 21st January 2011, 13:52

        Simple. Frank will remain the majority shareholder (that is will own more than 51% of the shares) so even if someone were to buy up the remaining 49% they would not have a controlling interest.

        Given that Patrick Head and Mr Wolff also own significant shareholdings in the company I’d guess at the most any other party could own would be around 25% of the company.

      • topdowntoedown (@topdowntoedown) said on 21st January 2011, 14:35

        To take a really simple example: my mate Dave is a windowcleaner. He owns 100% of the company and can decide what it does. If he sells half of the company to me, we each have 50% of it: there are two “shares” and two votes as to what happens.

        Now, say he decides to split the company into ten parts – ten “shares”. He sells three of them to me and one to his mum: he owns 60%, I own 30%, his mum owns 10%. Now, even if I and his mum want something to happen, he can still outvote us because he owns 6/10 shares.

        For Williams you could multiply that up to, say, a million shares: Williams himself can choose to hold onto 510,000, Head 90,000 and Wolff 100,000 (say) – and 300,000 are on the open market. Even if the remaining 300,000 are all owned by one person they don’t have control of the company.

  6. James said on 21st January 2011, 12:45

    Is this the begining of the end? This to me suggests that they havent managed to get the full amount of funding from sponsers and associates.

    This is a very risky move…

    • Bigbadderboom (@bigbadderboom) said on 22nd January 2011, 13:07

      The statement clearly states this is about sucsession planning and not about raising funds for the team. Patrick and Frank are doing the right thing in securing their legacy and the futures of their employees. What I don’t understand is why you would risk capital in a venture that in recent years has struggled to gain enough sponsorship to be competitive. Is the romance of simply buying into Williams enough, there is no chance of a dividend payout as the finances are all spent going for racing! I don’t understand enough about it, but for a fan to stick their hard earnd into a venture which the can only lose from seems a bit bewildering.

  7. wasiF1 (@wasif1) said on 21st January 2011, 12:48

    am doing stock business in Bangladesh,any chance I can buy it? Have there been any F1 team before in thew stock market? Will Bernie will add a “Premium” price tag to it?

  8. Hopefully this strategy does secure the long term future of the team as they claim. I can’t help but feel that a stock market flotation isn’t the ideal option, but the people at Williams are a lot more knowledgably than I am.

    If the flotation is like some of the ones for English Premier League Football teams in the 1990s where the shares were a few pounds each and fans bought them I think I will buying a stake in one my favourite F1 teams.

  9. Kevin said on 21st January 2011, 14:55

    I think this is a very shrewd move. Lets face it the Williams name is extremely well known worldwide and well associated with F1. I think it is and will become even more-so, an iconic name in F1, like Lotus, McLaren etc in the future. For this reason it will be an attractive investment. They have all the ingredients to win races, they know how to do it. So i think it would support the current investment in the team so it can carry on into the future, if Frank’s health did deteriorate.

    • Hairpin said on 21st January 2011, 17:28

      Yes I agree with all that Kevin has mentioned, but I think there is a deeper fundamental reason from Frank, that is to keep the name of Williams as an F1 team alive.
      Think of some of the teams on the grid today, and it’s hard to keep track of what they were called when they were first started.
      If in the distant future when Frank and all have departed, the new owners, (assuming it is sold) could if they wished change it’s name without problem, and I think it’s this, as much as anything that Frank is trying to prevent.
      Although this by no means prevents this action, its makes it far more difficult to get majority consensus for such a move and protects the company name

      • topdowntoedown (@topdowntoedown) said on 21st January 2011, 17:42

        Ironically the name of the team is one of the things that is unlikely to change any time soon!

        The F1 money arrangements mean that the older a team is, the more money it gets from the FIA. Ferrari obviously get the most, McLaren second I think, Renault get a lot… but Williams date from the early 80s(?) – changing the name makes it a new team and would lose an awful lot of money. (Unless all of the other teams agree, which is possible).

  10. bpacman (@bpacman) said on 21st January 2011, 15:03

    Given that this is an area I have worked in, I thought it may be useful to quickly summarise what this means for Williams.

    There are two main ways of “floating” a company on a stock exchange. The floating company can either create new shares in itself and sell these to investors (i.e. so if you buy a share in the offering for £5, that £5 goes to Williams plc). Or it can sell a number of shares that previously belonged to existing shareholders (i.e. so if you buy a share in the offering for £5, that £5 will go to Frank Williams / Patrick Head / Toto Wolff). Williams have stated that the intention is to follow the latter route. As such, there is no money going to Williams the company – and the motivation cannot be to invest in new facilities etc. Therefore, it seems that this is a way of Williams/Head/Wolff realising the value of their investment in the company without having to sell to a third party. So, for example, Wolff may have bought a 10% stake in Williams for, say, £5m in 2009. When the company floats, he can sell a proportion of this in the offering and make a profit on his investment. (Also to note – it is likely that one of the original conditions of Wolff investing in 2009 was that he was able to realise his investment within a defined timeframe through either the sale of the whole or part of Williams, or by floatation on a stock exchange).

    Once Williams are listed, their shares will be available to purchase by investors on the secondary market. So, if you wanted to own a piece of Williams, you could phone a stockbroker and purchase shares. I’m sure, given the size of Williams, this will probably be AIM (the Alternative Investment Market, a division of the London Stock Exchange for small to mid-cap companies).

    More interestingly, Williams will also be subject to the extensive FSA and market-imposed rules on disclosure of information. Amongst other things, Williams will be required to release full details of its financial results (which will probably include driver salaries, sponsorship income, FOM payments etc.) and will also be required to immediately release to the market any information which could materially affect its share price.

    I can’t imagine that Williams, the other F1 teams or Bernie are too excited by the prospect of this additional disclosure (and with it, the added transparency and scrutiny) for this still quite secretive sport. As such, I can’t help but feel that Williams are being pushed into this as a way of allowing one or all of its shareholders to realise the value of their investments without having to sell the team to a third party.

    • Roberto said on 21st January 2011, 16:38

      You’re totally right and that’s why I think Adam Parr’s statement doesn’t make much sense. If FW and Head want to make sure there will be some sound guy running Williams after they, they should contact this person or company, work with them for a few years, and then, when you want to retire, privately sell them the necessary shares, without the need of going public. With a flotation, it gets all much more complicated, because you have no control of who’s going to buy the stock. Add to that the fact that, in th US, most controlling shareholders of public companies have less than 30% of the stock! And, as you pointed, they will be subject to a series of regulations, which is going to increase costs.

      In my opinion, despite Adam Parr’s initial claim that there will be no fund raising, that should be the case, otherwise it would make no sense to make a flotation to do something that would be easier to do the way they are now. Just see McLaren and Mercedes deal, that would be the perfect way to do it, unless you want to raise funds

  11. Toto allegedly has options to take him up to 49% ownership. If they go public I would assume they would float new shares and have the chance to adjust the ownership shares as well.

    Put me down for 10 shares Adam!

  12. nickthegeek said on 21st January 2011, 18:55

    Am I the only one that woud be tempted to sink £100 or so into the team? Just so I can say I own some of Williams?

  13. Todfod (@todfod) said on 21st January 2011, 19:28

    I think this is actually a good move for Williams. I’m sure that in the company prospectus they are not only focusing on their F1 team for cash inflow, but are also putting due emphasis on their technologies, that can be sold to road car manufacturers.

    I think its a good way of raising capital, considering that Frank still is the controlling shareholder. I think that this move could be subject to some bad luck due to market fluctuations, but on the other hand, could also be a move that gets Williams the funding necessary to get it back to its glory days. I guess we will just have to wait and see.

  14. MinusTwo said on 21st January 2011, 23:18

    Williams floating their shares publicly gives them a way to raise funds in the future, whether they plan to raise the money now or not. This is the reason that just about any company decides to offer their shares for sale on an exchange- the large number of potential buyers equals liquidity and access to vast amounts of untapped potential investment.

    The one thing that I worry about is the idea of a racing team being operated like an ordinary business. In an ordinary business, the name of the game is maximizing profit, meaning that you spend as little as possible to generate the maximum return. I fear that shareholder pressure could make Williams operate with profit as their primary aim, as opposed to winning championships. These two things might not always agree.

    We have a good example of that here in Toronto with our sad sack of a hockey team, the Maple Leafs. They are the best funded hockey team in the world, hands down, but they havent won a championship since 1967. For the last few years they were owned by a pension fund that operated the team as a cash cow and couldnt care less about winning games as long as the seats were full.

  15. Stephen Jones (@aus_steve) said on 22nd January 2011, 4:23

    so does that mean we can buy a piece of williams..
    everyone want to save up a little bit!

    • nickthegeek said on 22nd January 2011, 12:17

      With luck yes, I think any f1 fan worth their salt will want to make a small investment (this could be a few quid… we dont know what the price will be) in Williams. I will be for sure. Not sure how much but I would be tempted to put in between £50-100. Almost worth it just to get to go to the shareholders meetings.

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