English football giants Manchester United have been given approval by the Singapore stock exchange to list their shares in the city, a source familiar with the deal said Friday.
A public listing in Singapore, which reports have said could raise $1 billion, will bring the reigning league champions closer to their legions of fans in Southeast Asia, a football-crazy region of more than half a billion people.
But the club will gauge market sentiment before launching the initial public offering (IPO) because of uncertainty sparked by the eurozone debt crisis, said the source, who asked not to be named.
“They have received approval but the timetable is not fixed,” the source told AFP.
“The company is not in need of funds so they are not in a hurry to list. Basically, they are keeping a watching brief on market conditions.”
Media reports have said United could raise $1 billion dollars from the IPO of 30 percent of its shares, which would value the company at more than $3 billion.
United were ranked by business magazine Forbes earlier this year as the world’s most valuable sports club, worth $1.86 billion.
For now, the target is for a listing at the Singapore Exchange (SGX) later this year but the source described it as a “moving target”.
Fears of contagion over the eurozone debt crisis and the US economy sinking into another recession have soured investor sentiment and could affect pricing for any company planning to list at this time, analysts say.
“Volatile markets and weakening sentiment would be a major drawback for anyone who wants to list,” said Vishnu Varathan, a Singapore-based economist with Capital Economics consultancy.
“It’s not the most ideal time to list, it’s not a bull market,” he told AFP.
“There’s trepidation and fear that more funds will be withdrawing from the market. Tapping new sources of funds could be a challenge and pricing could come under pressure.”
However, the source said the club’s American owners — the Glazer family — would likely opt for a two-tier share structure — of voting shares and non-voting preference shares — that would allow them to effectively retain control.
The Straits Times newspaper said that while preference shares have no voting rights, they can be sold at double the value of ordinary stocks.
Moreover, holders of these shares would be paid first before shareholders holding ordinary stocks in the event of an insolvency, the newspaper said.
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.
Asia accounts for 190 million of the estimated 330 million United followers worldwide, and most of the club’s sponsors are based in the region or generate a large part of revenue from it.
United had earlier planned to list in Hong Kong and snaring the club was a coup for Singapore, which has been in rivalry with the southern Chinese city as a regional financial centre.
SGX chief executive Magnus Bocker says Singapore, located in the heart of Southeast Asia, is a distinct capital market from Hong Kong, which offers a direct springboard into China.