McLaren Racing’s parent group to be acquired fully by Bahrain’s sovereign wealth fund

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Photo credit: McLaren Racing

McLaren Group, the parent company of McLaren Racing, is on the verge of being taken over according to Sky News. The British news outlet has learnt that Mumtalakat, the investment fund of the state of Bahrain, is on the verge of converting the equity of the organisation’s minority shareholders into warrant-like instruments.

The deal is expected to be announced later this week, and it would result in about 20% of the equity of McLaren to be converted into new contracts, leaving the Gulf state’s sovereign wealth fund as the group’s sole shareholder.

Sky News writes that these new contracts will have the economic rights to benefit from future ‘liquidity events’, such as an initial public offering, but aren’t classed as shares. The simplification of the company’s capital structure is an attempt to lure in an automotive original equipment manufacturer (OEM), according to Sky. A move inspired by McLaren transitioning towards a hybrid and electric vehicle company, which is underlined by their presence in Formula E and Extreme E.

Photo credit: McLaren Racing

Earlier in 2023, Mumtalakat had obtained the shares from Saudi Arabia’s sovereign wealth fund and the US-based financial investor Ares Management, claiming an already significant stake in McLaren. Together with an £ 80 million injection by the fund and a new boss for the road-car division in ex-Ferrari executive Michael Leiters, all seems to be going well for McLaren on the financial side of things.

That wasn’t the case during the Covid-19 pandemic, when a big restructuring resulted in the loss of hundreds of jobs and the race team requiring to sell shares in a move to raise capital. A loan from the UK government was rebuffed, prompting additional actions to improve McLaren’s financial position. Among these actions were the sale-and-leaseback of it’s Surrey headquarters and the sale of McLaren Applied Technologies.

On the sporting side of things there is also an upward trend, with the McLaren Formula 1 team going from last at the season opener to a podium contender during the second half of the season, giving plenty of reason to be optimistic after their 60th year in the sport.