Formula One hits the brakes on Singapore IPO

MOTOR SPORT racing company Formula One has delayed its Singapore initial public offer worth up to $3 billion, the fifth big Asian IPO to be postponed or pulled in a week, as weak markets bring the global market for new listings to a shuddering halt.

Worldwide, money raised from stock market flotations has slumped 46 per cent so far this year compared with the same period of 2011, with investors wary of the euro zone crisis, China’s economic slowdown and last month’s botched Facebook IPO.

Formula One, which planned to list in Singapore, has become the latest issuer to hit the brakes, dropping plans to lodge its IPO prospectus with Singapore regulators early next week, sources familiar with the company’s decision said yesterday.

But Bernie Ecclestone, the sport’s boss and a part-owner of the company, said that Formula One was biding its time, not scrapping the IPO altogether, and that its bankers would continue to meet prospective investors.

“We are getting prepared so all these things are done and then whenever we want to go, we can go,” the 81-year-old billionaire said. On Thursday, London luxury jeweller Graff Diamonds ditched its $1 billion IPO in Hong Kong, Asia’s IPO capital, which along with the United States has seen a slump in initial offers.

Deal volumes in Hong Kong have dived 85 percent so far in 2012.

In the United States, 12 IPOs were pulled or delayed in May.

Facebook has contributed to the chill in the American IPO market.

In just 10 trading sessions, shares in the social networking phenomenon have tumbled from an initial price of $38 each to $29.60, offering a stark warning to any company on the fence about entering the public markets.

Excluding Facebook, 72 US-listed companies have filed so far this year, raising proceeds of $13.1 billion, a 53 per cent decrease from a year ago.

“This has created a crisis of confidence,” said Scott Sweet, managing partner at IPO Boutique, based in Florida. “The companies still in the pipeline will stay in the pipeline. There is no reason to rush out when the granddaddy of them all has come and gone and left an indelible negative impression.” – (Reuters)