MANCHESTER United is set to become a publicly traded company tomorrow after investors filled the order book for its shares, despite warnings from analysts that the stock is overpriced.
City A.M. understands that there has been sufficient demand for the club to push ahead with its listing on the New York Stock Exchange, which will see it issue 16.7m shares priced at between $16 and $20 raising up to $330m (£210m).
It will be third time lucky for the club, after the owners, the Glazer family, abandoned earlier attempts to float in Singapore and Hong Kong.
But analyst Ken Perkins at Chicago-based Morningstar told City A.M. the proposed share price is “aggressive, if not excessive” and said a fairer value was around $10.
“From an investment perspective it just doesn’t seem attractive. They’re not going to pay dividends and the Glazers are going to retain control. As an investor I don’t know what you’re getting other than the hope the club is going to get bought by someone else.”
An $18 float price would give the company a steep predicted price-to-earnings ratio of over 110, compared to 14.4 for entertainment giant Disney.
The high price has led to industry speculation that many investors are individuals who have more interest in the bragging rights that come from owning a stake in one of the world’s most famous football clubs than they are in achieving a good return on their investment.
David Gill, Manchester United’s chief executive, was yesterday in London to help drum up additional support at an investor roadshow hosted by lead adviser Jefferies.
Supporters’ groups have been vocal in their opposition to the float, complaining that the proceeds will not be spent on improving the club’s playing squad but instead will be used to reduce the £420m debt pile that Manchester United has carried since the Glazers’ leveraged takeover in 2005. If all goes to plan the family will also enjoy a pay day of around $140m.
Institutional investors have repeatedly complained about the proposed share structure, which will leave the current owners with 99 per cent of voting rights.