Man U posts record profit ahead of IPO

 
Steve Dinneen
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Manchester United yesterday moved one step closer to its bumper $1bn (£618m) Singapore IPO after unveiling record profits and revenues.

It swung to a pre-tax gain of £29.7m, compared with a loss of £79.2m last year. Its total revenue also soared 16 per cent to £331.4m – the first time it has surpassed the £300m mark.

This was driven by a 27 per cent rise in commercial revenue, largely down to the club’s £80m shirt sponsorship deal with Aon. Media income was also boosted 10 per cent to £119m thanks to the start of a new Premier League TV rights deal. Match day income was £108.6m.

Critics of the leveraged business model employed by owner Malcolm Glazer will point to the £51.7m paid to service the club’s bond debt. However, the club’s debt has fallen from a high of £790m in the wake of the Glazers’ leveraged buyout to £303.3m.

Brewin Dolphin analyst Roy Kaitcer told City A.M. the debt pile is becoming less of an issue, especially if the Glazers use some of the IPO proceeds to pay off some debt as expected.

The results will improve the prospects of pulling off the $1bn IPO of 20-30 per cent of the club’s stock in Singapore in October.

The proposed structure of the float – whereby new shares will have half the voting rights of those held by the Glazer family – have raised eyebrows, although Kaitcer does not expect this to derail it.

Some bankers, however, are sceptical of the Glazers’ chances of pulling off a deal. One told City A.M. “This is absolutely insane. It smacks of some very weak bankers going along with a plan they fear will fail because they are desperate for the business. There is no way this thing works.”

MEET THE ADVISERS: CREDIT SUISSE

MERVYN CHOW
CO-HEAD, GLOBAL MARKETS

Mervyn Chow, who became Credit Suisse’s co-head of global markets solutions for the Asian Pacific in July, is in charge of the advisory team leading on the proposed IPO.

Credit Suisse declined to comment on its team yesterday but sources said that Chow was “involved and aware” of the planned transaction.

Credit Suisse Group has been mandated as sole global coordinator and bookrunner on the IPO, which is expected to involve a sale of around 25 per cent of the equity, in a deal set to value the firm at a mouthwatering (and some would say unachievable) $4bn.

JP Morgan and Morgan Stanley are said to be supporting Credit Suisse on the deal.
Credit Suisse has recently led the Hong Kong IPO of Shanghai Pharmaceutical, the US IPO of Renren and the Kuala Lumpur IPO of Bumi Armada.
David Hellier