SINGAPORE

Manchester United’s Singapore share listing would be a coup for the city-state, boosting its profile as a centre for raising capital, but the sale could yet be delayed, analysts said.

The Singapore Exchange (SGX) approved the club’s application last week but United, earlier reported to be aiming for a float in October, are not yet fixing a date due to the turmoil in world financial markets.

The English football giants decided to stage their initial public offering (IPO) in Singapore after it offered more favourable regulations allowing the controversial US-based Glazer family to retain a firm grip on the club.

“I think the CEO of the Singapore Exchange is doing everything that he can to get high-profile listings in Singapore, to increase the brand recognition of Singapore,” said Jonathan Galaviz, a US-based economist and consultant who tracks Singapore closely.

Hong Kong was the 19-time English champions’ first choice for a listing, but the Straits Times newspaper said SGX made a last-minute dash to pitch Singapore as a better alternative.

According to sources familiar with the deal, Singapore won partly because it allows a two-tier IPO, with one block of shares that come with voting rights and another without.

As such, the Glazers’ control over the club will be less diluted than if all the IPO shares had votes. The arrangement is not unprecedented but has been criticised by some investors, who say that equal equity funders should have equal voting rights.

Sources involved in the deal say that sports clubs “are quite different from most companies” and the structure allows owners to make quick decisions, such as on player transfers.

SGX chief executive Magnus Bocker said that existing listing rules allow non-voting preference stock to be sold as part of an IPO, unlike having different classes of ordinary shares with different voting rights.

Preference shares normally pay out a fixed dividend — similar to a bond — that must be distributed before ordinary shares can receive a dividend. They also have priority over ordinary shares in the event of a liquidation.

With SGX approval out of the way, the IPO’s timing is now the issue.

The eurozone debt crisis and sluggish US economic conditions have affected global investor sentiment in recent weeks, taking stock indices on a roller-coaster ride reminiscent of the 2008 global financial meltdown.

“Financial markets are currently going through considerable stress,” Rajiv Biswas, Asia-Pacific Chief Economist at the IHS Global Insight consultancy in Singapore, told AFP.

But companies still need to raise funds and it may take years for troubled western economies to tackle their problems, he said.

As such, Singapore was a good place for the IPO because “economic power is shifting from West to East, with Asian countries becoming increasingly important sources of global capital flows”, Biswas said.

“This is particularly the case for Manchester United, given the tremendous support for the Red Devils amongst fans throughout the Asia-Pacific region and the club’s plans to grow its Asian business.”

Despite the club’s successes on the pitch under the Glazers, the family has become a divisive presence at Old Trafford since their 2005 buyout in a deal that relied heavily on debt financing.

Still, the club, which has won Europe’s top club competition three times, topped business magazine Forbes’ list as the world’s most valuable football club in 2010 with an estimated worth of US$1.86 billion.

Media reports have said United could raise US$1 billion from an IPO of 30 per cent of its shares, valuing the company at more than US$3 billion — more than 60 times its pre-tax net profit of about US$48 million in the year to June 2011. It lost money in the previous year.

The approval marks a step in Singapore’s attempts to catch up with longtime rival Hong Kong, which has long overshadowed the city-state as a capital market.

Hong Kong was the world’s biggest IPO market in 2010 for the second year in a row, as firms raised more than US$50 billion in the city including two monster sales by Asian insurer AIA and Agricultural Bank of China.

SGX was meanwhile rebuffed by Australian regulators in its highly publicised Aus$8.4 billion (US$9.0 billion at current exchange rate) bid for the Australian Securities Exchange (ASX).

But United’s decision to list on the SGX came not long after another Singapore coup, the US$5.5-billion IPO earlier this year of Hutchison Port Holdings Trust, the China port unit of Hong Kong conglomerate Hutchison Whampoa.

“It’s a great feather in the cap for Singapore and SGX,” said Matthew Gorman, Singapore-based partner and capital markets specialist with international law firm Stephenson Harwood.

It is estimated that 190 million of Man U’s 300 million supporters around the world are in Asia.

“Are there any businesses in any other industries that have got that number of fans? Not many at all,” said Kevin Alavy, a London-based director of initiative with Futures Sport + Entertainment consultancy.

AFP

The Manchester United squad in training. The club, which has 300 million supporters around the world, topped business magazine Forbes’ list as the world’s most valuable football club in 2010 with an estimated worth of US$1.86 billion. (Photo: AP)