The Formula One team owner is in discussions with the national wealth funds of Bahrain and Saudi Arabia regarding a funding injection to propel it into the electric vehicle era.
McLaren Group, the British supercar manufacturer and owner of a Formula One team, is in discussions to secure hundreds of millions of pounds in new investment to propel the company into the electric vehicle era.
McLaren has initiated discussions with current shareholders, including the sovereign wealth funds of Bahrain and Saudi Arabia, regarding the injection of at least £250 million into the company over the next few months.
As the corporation attempts to bolster its balance sheet till the end of the decade, a precise sum has yet to be determined, but one insider predicts it will be greater than £250 million.
McLaren’s new Artura hybrid supercar supply delays prompted the investment bankers at Lazard to be brought in to advise on the potential size of the fundraising effort.
McLaren must conduct what it describes as “technical enhancements to guarantee Artura owners enjoy optimal long-term performance” despite excellent evaluations for the new vehicle.
These enhancements have been impacted by the supply chain delays that have hampered global car production, causing the Woking-based company to halt Artura production and client deliveries until the end of the month.
One source indicated that regardless of Artura’s difficulties, McLaren had always intended to engage with investors over the implementation of “the appropriate financing structure to support our long-term growth strategy and business plan.
Both Mumtalakat Holding, a long-standing McLaren stakeholder, and the Public Investment Fund of Saudi Arabia are anticipated to commit to fresh capital raising.
Another McLaren investor, Ares Management, is likely to be engaged.
This week, it was revealed that Mumtalakat had acquired a portion of McLaren’s famous historic car collection as part of an additional £100 million financial commitment to the company.
The forthcoming fundraising of at least £250 million, according to insiders, is in addition to this £100 million.
McLaren stated on a third-quarter earnings call this week that it was “in active discussions with all shareholders contemplating a recapitalization of the group,” but did not specify the size or structure of a potential deal.
It was unclear over the weekend if the fresh funds would be delivered in the form of equity, but financial restructuring professionals were reportedly involved.
The monies would be allocated only to McLaren Automotive, as its Racing business is now a separate organization inside the group and does not require additional funding.
Michael Leiters, a former Ferrari executive, was appointed as the head of McLaren’s road-car division earlier this year.
During the COVID-19 pandemic, the company was compelled to undertake a comprehensive reorganization that resulted in the elimination of hundreds of positions and the raising of considerable amounts of equity and debt to repair its financial sheet.
McLaren’s racing business, which includes the Formula One vehicles raced by Lando Norris and Daniel Ricciardo this season, has also experienced a turnaround under the leadership of Zak Brown.
McLaren has also engaged in several corporate transactions since the beginning of the pandemic when it applied for a government loan but was denied by ministers.
Former Diageo CEO Paul Walsh, who joined McLaren in 2020 as executive chairman, oversaw the sale of a stake in McLaren Racing to a different group of investors and the sale-and-leaseback of its stunning Surrey headquarters for £170 million.
Additionally, it sold McLaren Applied Technologies, which produces revenue through sales to corporate customers, in the previous year.
The club, founded in 1963 by Bruce McLaren, is one of the most recognizable names in British motorsport.
It has won the constructors’ championship eight times in fifty years of F1 competition, and its drivers have included Mika Hakkinen, Lewis Hamilton, Alain Prost, and Ayrton Senna.
In its inaugural season, the team won 180 Grands Prix, three Indianapolis 500s, and the Le Mans 24 Hours.
McLaren’s on-track operations contribute around 20% of the company’s annual revenue.
Following the 2017 resignation of Ron Dennis, the experienced McLaren manager who had led the F1 team through its most successful period, the corporation unified its various sections.
After a heated battle with fellow shareholders, Mr. Dennis sold his shareholding in a £275 million transaction.
This weekend, McLaren declined additional comment on its fundraising discussions.
