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GP Week : Issue 168
They say all publicity is good publicity. And while anyone who has been attacked by the tabloids might disagree with the adage, the powers that be at CVC know just how true it is. Despite a year that has seen Bernie Ecclestone come under fire for bribing German banker Gerhard Gribkowsky, with prosecution still a very real possibility, and the highly publicised promotion and withdrawal of the proposed F1 initial public offering, Formula One is still CVC Capital Partners’ most profitable investment. It must be acknowledged that this has been a bad year for CVC overall, with $1.8 billion lost through their stake in Australia’s Channel Nine TV network alone, and so F1’s comparative success should be viewed through the lens of other failures. And the IPO – delayed indefinitely though it might be – had its own role to play in improving CVC’s F1 profit margins. In the run-up to the initial IPO date (originally due to take place in June), CVC sold off a significant chunk of their F1 business, reducing their overall stake by nearly fifty percent for a total of $2.1 billion. At the start of the year, CVC held a 63 percent stake in Formula One. But in May they did a $1.6 billion deal with Waddell & Reed, BlackRock, and Nor way's Norges Bank Investment Management, and in June Waddell & Reed picked up another $500 million stake, reducing CVC’s share of the business to 35 percent. Since first acquiring a stake in Formula One in 2005, CVC have increased the value of their holding to 4.7 times that of their initial investment, the financial services company informed their investors at a special meeting in London last week. FORMULA ONE: PROFITABLE, EVEN IN CRISIS F1 >>> NEWS 10 GPWEEK.com // PARTNERS: