Man Utd's two-tier IPO plan risks investor ire

 
City A.M. Reporter
Singapore Exchange's coup in luring Manchester United to the city is threatening to turn sour as the bourse comes under fire for plans to let the club list using a structure that will minimise the influence of new shareholders.

The SGX is set to approve the initial public offering of up to $1 billion from the English Premier League champions this week or next, two sources with direct knowledge of the listing said.

The Red Devils have spent the past few weeks courting Asia's major institutional and sovereign investors including Singapore state investor Temasek , said the sources, who were not authorised to talk to the media about the plans.

But the club's plan to use a two-tier system of shares to ensure the Glazer family, which owns soccer's biggest brand, will retain control has some investors and experts calling foul.

"I believe this is a backward step for the SGX to take from the perspective of good corporate governance and minority shareholders' rights," said Mak Yuen Teen, a professor at the National University of Singapore who helped draw up the code of corporate governance for listed companies in Singapore.

"It reflects an inclination towards issuers and controlling shareholders as opposed to institutional and other minority shareholders," he said.

An SGX spokeswoman said the exchange was unable to say anything about the discussions with the club.

"We do not comment on speculation nor about our dealings with individual companies," she said.

Sources with knowledge of the club's early discussions with potential investors say it has steered clear of talking about the structure, flagging instead expectations for underlying profit margins to top 30 per cent and its strong Asian fan-base.

Most investors are wary of shareholder structures that make it harder for them to monitor and change a company's management.

"Economic interest and ownership interest are not aligned in these structures, and you can find someone with 4 per cent of shares controlling the company, for example," said David Smith, head of Asia corporate governance research at Institutional Shareholder Services.